Wednesday, 7 May 2014

DO, RIG, SDRL - drillers battling higher

Even when the main equity market was lower this morning, the Oil/Gas drilling stocks were still holding slight gains. Diamond Offshore (DO), Transocean (RIG), and Seadrill (SDRL) closed +1.1%, +0.6%, and +1.5% respectively. Near term outlook is bullish.

DO, weekly

RIG, weekly

SDRL, weekly


*rather than get overly wrapped up in the day to day price noise, I will again highlight the bigger weekly cycles.

Broadly speaking, the drillers broke a multi-month down trend just a few weeks ago. Last week was a bit of a choppy mess, but this week, the drillers are again making a play to push significantly higher.

Reasonable near term targets...

DO - 56
RIG - 45
SDRL - 36

Certainly, if the main market gets stuck - as I believe it will, sometime between mid/late May..and early June, I'd expect the drillers to also start rolling over, but from levels at least 5-10% higher than currently.

**RIG has earnings at the Wednesday May'7 close.. so it will be interesting to see how that trades across Thursday..and into the weekend.