Schlumberger Ltd. (NYSE:SLB) Shows Strong Technical and Setup Ratings for Potential Breakout

For technical investors, finding stocks that are in a good trend and ready for a short-term price change can be a strong method. One technique uses a filter for securities that show healthy basic technical condition while also forming a narrow price pattern, indicating a possible breakout is near. This method uses two main proprietary measures from ChartMill: the Technical Rating, which measures the general condition and trend of a stock, and the Setup Quality Rating, which evaluates the condition of its present price pattern. A stock with good scores in both areas may present a good balance of risk and reward for a breakout trade.

Technical Condition: A Good Base

The first part of this method is confirming the stock is in a technically good state, avoiding those in clear declines. Based on the newest ChartMill Technical Analysis report, Schlumberger Ltd. (NYSE:SLB) receives a Technical Rating of 7 out of 10. This score puts it in the "uptrend" group, showing a positive technical base. The report lists several details that build this rating:

• Trend Condition: While the long-term trend is still seen as neutral, the short-term trend is positive. This indicates the stock is building speed and becoming more interesting to traders recently.
• Moving Average Condition: The stock is priced above important short-term moving averages, like the 20-day, 50-day, and 100-day Simple Moving Averages (SMAs), which are all rising. This condition often works as a flexible support level.
• Recent Price Action: The stock has shown positive price action over several periods, with increases of about 4.3% in the last month and 12.5% in the last six months.

This good technical rating is important for the method because it directs money toward market leaders or improving stocks, instead of trying to buy a declining stock. A stock with a high technical rating has a greater chance, based on data, to keep following its current trend, giving a helpful push for any breakout try.

Setup Condition: The Pattern Before the Change

A good trend by itself is not a reason to buy; buying after a fast rise has the danger of a quick drop. The second part of the method looks for a high-condition price pattern, or "setup," which gives a clearer point to enter and a sensible place to set a protective stop-loss order. SLB shows a good example here, with a Setup Quality Rating of 8 out of 10.

The technical report states that prices have been forming a pattern within a band over the last month. This time of coiling action lets price movement slow and builds pressure for a possible directional change. Important parts of the setup are:

• Clear Resistance: A defined resistance area is seen just above the present price, near $38.13. A clear move above this point could show the start of a new upward phase.
• Close Support: A support area is formed below, from about $35.18 to $36.40, made by a mix of moving averages and trendlines. This gives a concrete level to control risk.
• Large Trader Activity: The report also notes that big traders have shown activity in SLB in recent days, as shown by the Effective Volume indicator. This kind of buying can be a positive early signal.

A high setup rating is needed because it answers the "when" to buy. It finds times when the stock is resting inside its trend, giving a lower-risk entry point with a clear exit plan if the expected breakout does not happen.

Possible Trade Structure

From this study, the automatic system indicates a possible breakout setup. The idea is to set a buy-stop order just above the noted resistance at $38.14, which would only activate if the stock gains enough force to move past that level. To limit loss, a stop-loss order could be set near $34.64, below the recent support area. This plan tries to join a confirmed upward move while firmly limiting possible losses.

Finding Other Ideas

The mix of a Technical Rating of 7 or more and a Setup Rating of 7 or more is a filter used to regularly search the market for similar ideas. SLB is one present example that fits these rules. Investors searching for other possible technical breakout setups can use this filter themselves each day with the Technical Breakout Setups tool.

Disclaimer: This article is for information only and is not investment advice, a suggestion, or an offer to buy or sell any security. The study and trade setup described use automatic technical measures and are not a promise of future results. Always do your own research, think about your risk comfort, and talk with a qualified financial advisor before making any investment choices. Past results do not show future outcomes.