Tuesday, 12 May 2015

RIG, SDRL - rising with Oil

With WTIC Oil back above the $60 threshold, energy stocks were notably strong today. The Oil/Gas drillers of Transocean (RIG), and Seadrill (SDRL) settled higher by a very significant 3.3% and 5.1% respectively. Near term outlook is bullish into June, but there will be strong resistance at the declining 200dma.

RIG, daily

SDRL, daily


To be clear, I have been seeking a bounce in WTIC Oil into the summer, and we've already traded in the low $60s. Oil still looks set for the 65/67, possibly $75 before the next turn lower.

Perhaps RIG/SDRL - along with the broader market, will become maxed out when Oil gets stuck within the secondary target zone of $67/75 in June/July?

From there.. it is merely a case of whether RIG and SDRL will break the lows of mid March. Right now... new multi-year lows look a little unlikely.

*I have no interest in being long energy stocks until a sig' retrace lower in the main market (and Oil).. and that might not be the case until Sept/Oct.

Of the two companies, I favour RIG over SDRL, but both look good for the longer term.