Eight month ago, we stumbled upon the daily chart of Oil States International Inc (NYSE:OIS) stock and immediately recognized a dangerous situation. A few days before New Year, while OIS was trading close to $40 a share, the Elliott Wave Principle warned us that “the bears are supposed to take the wheel again“, since there was a “Textbook Elliott Wave Setup” pointing south. So instead of joining the bulls, the following chart suggested we should get ready for a bumpy ride in the opposite direction.
The daily chart of Oil States stock revealed a five-wave impulse from $65.77 down to $21.44, followed by a three-wave recovery up to $41.75. According to the theory, the trend was supposed to resume in the direction of the impulsive sequence, which meant a major bearish reversal was likely. It is August, 2017 now and last week Oil States stock fell to a new multi-year low of $20.90. The last time the price was trading at these levels was over seven years ago, in June 2010.
The company lost nearly half its value in just 8 months. 47.1%, to be exact. The bad news is, that judging from the structure of the recent decline, Oil States shareholders’ suffering is not over yet. It looks like the selloff is actually accelerating and we would not be surprised if the stock loses another 50% from current levels. The price of crude oil already breached its 2008 lows, but the price of Oil States stock is still far from its 2009 bottom of $6.37. Having that in mind allows us to stay bearish and look forward to the area near $10 a share. The crisis for oil-related companies seems to be far from over.