Review: HP Achieves Downside Target and Rebounds

On September 14, 2015, we posted to our site an article about Helmerich & Payne (HP).  At the time we had the following investment conclusion:

“We advise that investors consider HP at the ascending $39.43 level or below.”

HP fell to the level indicated in our posting and has since increased +37% from the article date and +50% from the date of when the stock crossed below the ascending $39.43 level.  Below is the updated Speed Resistance Lines and our perspective on the potential for the stock going forward.

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As can be seen in Edson Gould’s Speed Resistance Line (SRL), Helmerich & Payne did decline below the ascending $39.43 level on January 20, 2016, nearly 3 months after the initially posted article.  From that time, HP has increased +50%.  Worth noting is the resistant of HP at the ascending mid level of $58.13.  Investors might use that level as a rough guide to where the stock might experience some upside challenges.

However, the most pressing level to watch for is Dow Theory’s 50% Principle which measures the rise (or fall) of a stock at the halfway point between the prior major move.  In the case of Helmerich & Payne, the halfway point of the last major move (July 2014 to January 2016) is at $79.16 which is illustrated below:

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The 50% Principle happens to coincide with the intermediate peak set on May 2015.  A failure to move higher could indicated that a retest of the January 2016 low is possible.  However, if a breakout to the upside occurs instead, HP could make a legitimate run for the prior peak.

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