Will Weakness in Crude Send Schlumberger Limited (SLB) Lower on Earnings?

Schlumberger Limited (SLB) is a Houston based information technology services provider with a focus on the oil and gas sector. At the time of this post (10:40AM CST), SLB is currently trading at 76.83, down 1.99% on the day. SLB is also currently continuing to press its recently formed 52 week lows of 75.60, well off the highs of 118.76 which printed in early July. The stock has been in a steep decline ever since, as its value has been correlated closely with the continued slide in the price of crude oil. SLB is scheduled to report earnings today, 1/15/2015 after the closing bell.

Over the last eight quarters of earnings data available, SLB has traded relatively bullishly, moving higher on five out of eight sessions immediately following the EPS release. The average historical move during this same time period was a modest 2.8%. The options market is currently pricing in a larger than average average move of approximately 5.03% based on the price of the ATM straddle. This would represent a change of around 2.90 in the stock by tomorrow’s monthly options expiration date. SLB continues to decline in price and remains well below the downward sloping Ichimoku Cloud on the daily chart. With seemingly no end in sight for declining prices in crude oil and a bearish technical setup in this name, I will certainly be leaning bearish SLB going into this afternoon’s earnings announcement.