Anatomy of a trade gone wrong, SLB

When I have a losing trade, no matter how small, (other than a hedge) it bothers me.  Because of the level of thought, and continuous analysis I devote to making that decision, a bad trade really really bothers me.

No trade has bothered me more than SLB.

In late December, as SLB reported solid numbers, in the face of declining natural gas prices and Crude near 100. The oil service stock was acting weak prior, but after they reported the stock, started to move.  In late January it tested its 200SMA, then started to break out.  After a pretty over bought condition, it consolidated at its 14SMA, then pushed higher. The action looked normal for a bullish stock in a bullish market.

After an overbought condition (and testing the trend line), it started to pull back again. However, this go around it would be susceptible to outside forces. The 'Brazilian growth fears' caused the first collapse highlighted by the blue arrow. After a period of consolidation from the negativity, it started to regain its ground and push higher.  I thought this was due to its superior fundamentals and the fact that Oil prices were all above $100.

The red circle highlights were SLB was recapturing its bullish consolidation on the 200SMA.  At this point, I thought SLB would, at worst, chill on the 200SMA until investors realize the disconnect in valuation, as high oil prices would merit continued demand for their services.  Unfortunately, Baker Huges took down the sector, with their negativity. Obviously, the negativity continues.

Fundamentally, even I foretold of Natural Gas production cuts on 12/30/2011, and the market was already discounting the servicers (BHI and HAL) most leveraged to North American Fracking. Despite differences within the sector, SLB still got knocked. Because Baker Huge's warning was so big, SLB had to acknowledge the weakness in North American fracking too, a sector they are exposed to by less than 33%. (Its really less than 33% because of the liquids they are involved in along with NatGas.)

Prior to this negativity, I was  eventually expecting SLB to trend toward the low 90s because of oil's price, over the next few quarters.

Instead we got a wave of negative sentiment that is making SLB test its Nov low end range.