Weatherford International Plc (NYSE:WFT), the oil and natural gas company, ended the last session with a gain of 6.28% after four consecutive trading sessions in the red, after it announced plans to lay off a few thousand workers more, saving $640 million a year for the company. It may shred 18% of its 49,000 strong workforce with most of that taking place in the North American operations. The company is facing a lot of pressure from the sharp decline in the energy prices and that has affected the revenue too, pushing it into the red on an adjusted basis. The revenue reported this week came at $2.79 billion against the expected $3 billion.
The long term chart of Weatherford International Plc (NYSE:WFT) speaks quite a lot about the technical state. In the period of 2003-07, the stock had rallied from $10 to $50 levels in an uninterrupted manner but the bear market 2008 saw the entire gain being lost in just 6 meager months! That kind of crash generally paralyses a company but somehow this one has managed to pull itself back. The band of $7-$9 has been tested twice more in the last 5 years and every time the bulls managed to provide support. Essentially the stock has been stuck in a huge band of $9-$25 for the last 5 years.
The first month of this calendar year saw a bottom at $9.40 and the following rally gained more than 50% in the next 3 months. The uptrend remains intact in the short term and as long as the short term support area around $12-$13 remains intact, it may appreciate further to $17 levels in the coming few weeks. Now the band of $17-$18 may well contain the rise for a few months as a lot of big sellers will be waiting there with some heavy unloading to do. The immediate things the investors need to see are significant follow up buying today.