Sunday, November 23, 2014

RIG Transocean Weekly Chart Positive Divergence Developing

RIG is one of the knife-catches that remains weak. Keystone liked this one early October and a positive divergence bounce occurred after some additional weakness resulting in only a flat trade. Ditto for the next bounce from early November. It was complete dumb-luck for Keystone to be out of RIG as it leaks lower over the last couple weeks, however, price is in a sideways churn through 25-30. The daily chart remains very attractive with positive divergence and the weekly chart continues to set up with possie d. Keystoen will look for a reentry likely when the MACD line goes possie d.

If you recall from the last time this chart was shown the expectation was for a basing for price and another lower low should occur (on the weekly basis). That same scenario is in play since the MACD line is weak and bleak. The other indicators are calling a bottom (green lines)with positive divergence so there should be a recovery on tap, but the MACD line wants price to back test the 25-26 level one more time after the bounce. Price may pop to 28 or so then retreat, which should be a firm base, over the next three weeks, then more sustainable up. So if you are currently long RIG on the long side now, it is likely worth holding and let play out for the next couple months.

Price has to move back to the middle standard deviation band at 33.59 and dropping, at a minimum, since the lower band was violated. Perhaps the middle band will drop and form a confluence with the strong horizontal resistance at 30 which will create a magnet for price to target. One to three weeks would be needed for the MACD line to turn possie d and identify a firm bottom for RIG, so perhaps by mid-December.

Oil plays are tricky these days and will be this week with the OPEC meeting on Thursday (Thanksgiving) as US traders are eating turkey and enjoying family time. RIG has lost one-half its value over the last year but it appears the worst is over and 2015 should paint a rosier picture. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

Note Added on 12/14/14: RIG continued down the rabbit hole with the oil price collapse. WTIC drops under 60 to a 57 handle. RIG is down to 16.47 in complete collapse. DO bounced over the last two weeks. SDRL continues lower to 11.06. The entire oil and energy sector is in collapse. The carnage is extensive. XLE is down -27% off the summer time top.

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