Thursday, 4 December 2014

SDRL - horror show of the year

Whilst the broader equity market has broken new historic highs in December, the horror show continues for many energy stocks. The oil/gas driller - Seadrill (SDRL) continues to implode, settling -7.3% @ $12.44. Outlook into early 2015 remains... dire.

SDRL, monthly


*I'll skip the daily/weekly charts, and just highlight the giant monthly chart.

Without question.. since Oil - along with the energy stocks peaked in June, it has been an absolute horror show. SDRL has collapsed from $39.35 in June... to hit a new five year low of $1227

Sub $10?

SDRL looks set to test the $10 psy' level, whether this month.. or Jan/Feb. If WTIC Oil $50s.. or even $40s, in 2015 (whether briefly.. or across much of the year).. SDRL is not going to even be able to hold $10, and will likely be trading in single digits.

I have no concern about the long term viability of the company though, and the same goes for other drillers, such as Transocean (RIG) and Diamond Offshore (DO).

*bonus chart... RIG, monthly

Like SDRL, RIG has been smashed to pieces. Next support is around 17/15.. but $10 seems viable, if Oil falls (and sustainably) trades in the $40s next year.

No hurry to buy

In the meantime, I have ZERO interest in picking up what some traders might see as a 'bargain'. Until energy prices floor - which is going to be a tricky aspect to judge, stocks like SDRL are going to remain under severe pressure.