Key Energy Services (KEG)

Company

"Key Energy Services is the largest provider of onshore well service rigs in the United States and one of the leading onshore, rig-based well servicing contractors in the world. The company provides a complete range of well services, including rig-based well maintenance, workover, well completion and recompletion services, fluid management services, pressure pumping services, fishing and rental services, electric wireline services and ancillary oilfield services. Key Energy Services has operations in all major onshore oil and gas producing regions of the continental United States and internationally in Argentina and Mexico. Additionally, the company has a technology development group based in Canada and ownership interests in a drilling and production services company in Canada and a drilling and workover services and sub-surface engineering and modeling company in the Russian Federation." (company website)

keg(3-1)
KEG 4-month chart
keg(3-1)_1yr
KEG 1-year chart

Sell short

At today's high, KEG traded up more than 80% over its July low. By any measure, that is "too much, too fast." Today broke a chain of seven consecutive up-days that have stretched the upper limit of the Bollinger band. The fact that it opened higher but closed below the previous day is a bearish sign. I believe that the price is almost bound to fall somewhat over the next 1½-2 weeks, and I believe I can make a short-term profit from being short.

  • Percentage price oscillator (PPO) — significantly above the signal line, but has begun to converge back toward it
  • Volume — heavily traded at a stable volume

Based on technical analysis, MarketEdge calls KEG a "buy" in a "weak upward trend," noting that it is "overbought."

Buy to cover

gain Bottom line
-4%

Wrong.

The lesson I will take from this is to not try to "lead" the PPO too much. I still think there will be a retracement, but I clearly jumped too soon.