Bulls in Charge of Smith International

Published on Friday, 06 August 2010 02:42 Written by Christian Paolinetti

New York, August 6th (TradersHuddle.com) - Shares of Smith International, Inc. (NYSE:SII) (NYSE:SII) ended the trading session higher by $0.2 or 0.46% from its previous close. Smith's price action formed what is considered to be a bullish engulfing candle that could very well signal continuation of trend or reversal on ongoing weakness.

Smith International, Inc. (NYSE:SII) provides products and services to the oil and gas exploration and production industry. Its products and services include drilling and completion fluid systems, solids control equipment, waste management services, three-cone drill bits, diamond drill bits, fishing services, drilling tools, underreamers, sidetracking systems, and liner hangers.

Smith's recent stock range has been formed by a trough where calculated support was defined at $39.88 and by a peak that established the resistance level at $44.25, which could be used by traders planning their trades.

Traders wanting to establish a position in Smith International or traders that are already holding the stock can use the bullish engulfing pattern to their advantage. The pattern provides a defined risk as it shows where the bears were able to push the stock down, before the bulls stepped in.

The bullish engulfing pattern is a leading indicator that provides an alert to the bulls that the trend will continue or that there is an immediate reversal to the short term weakness seen on the stock. Below an Engulfing Bullish Candle Illustration: