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CANSLIM.net Profile: Superior Energy Services, Inc. (SPN $20.10) provides a broad range of specialized oilfield services & equipment primarily to major and independent oil and gas companies engaged in the exploration, production and development of oil & natural gas properties offshore.  The company is benefiting from strong demand for well intervention and lift boat services in the Gulf of Mexico, coupled with robust commodity prices and higher oil and gas production.  Sales have accelerated during the past four quarters rising from 7% to 49%, while earnings per share increased by 340% from the year-earlier quarter (satisfying the “C” in CANSLIM). Results reflect higher sales in all segments, improved gross margins and higher equity in income of affiliates.  In addition, the firm is a leader in the strong Oil & Gas-Field Services group, a group now ranked 31^st on IBD’s 197 Industry Group list, helping this selection meet the “L” in CANSLIM.  The annual earnings history (the “A” in CANSLIM) suffers because of the cyclically of the company’s commodity-based operations, and thus is not as meaningful an indicator as companies in more stable businesses.  Nevertheless, the Return on Equity of 9% falls short of the 17% minimum guideline recommended by IBD.  Not withstanding these blemishes, strong insider ownership (39% of total shares outstanding) and favorable technical action make this company an interesting investment consideration. 

What to Look For and What to Look Out For: SPN is at a critical juncture relating to its breakout on July 25^th. A fall below $18.33 (exceeding its July 18th low) would negate the recent bullish action and increase the risk of filling the bullish gap up experienced on July 5th.  However, if SPN can regain its footing, a break above the $20.18 mark, accompanied by at least 50%+ above average volume, would trigger an additional new buy signal.  An early technical "sell signal" to watch out for would be any violation of support at the upward trend line drawn along the recent lows.  As always, stop losses should be placed 7-8% below your entry point to preserve capital.

Technical Analysis: On July 5th SPN gapped up with a considerable gain on high volume out of an earlier handle-like pattern as a smaller cup-with-handle was formed within a larger one.  On July 25th, SPN gapped up to new highs as it emerged out of the larger 20-week cup-with-handle pattern on above average volume.  The bullish breakout on higher than average volume followed through on the previous day’s gains which had helped lift it virtually clear of all resistance at prior chart highs.  Despite clearing “overhead supply”, the stock finished the session on the 25^th in a lackluster fashion, reversing and ending near the lower portion of the day’s trading range.  In candlestick analysis, the 25^th and 26^th sessions give the appearance of “bearish counterattack” lines.  The bullish activity on July 25th spilled into trading on the following day with the stock opening on July 26th at $20.95, representing a +$0.95 bullish gap from the close on July 25th.  Again, by the close the stock weakened, ending the day at $20.04, and in the process SPN ducked below its $20.18 pivot point.