Weakness or a powerfull coilRIG has lagged major oil players such as xom. Xom was able to breakout of the consolidation in the 55 range to be past 60 dollars again. RIG on the other hand has failed to breakout past the 3.71 resistance level.
This is on the back of a major move in oil prices up. When oil was at 64 a few weeks ago RIG reached 4.5, but now that oil is at 65 its trading at 3.5. This might be a major sign of weakness, especially on the back of earnings, which generally came in as expected. However, This if it does break past 3.5, i see a massive catch up move past 4.5 into the 5-6 range.
Economic: The API released inventory levels, and it came in extremely bullish. The draw was -7 compared to -2 expected. Oil did move down lower, although I expect OIL to move past the $70 range. This will be a major multi year resistance level. In the past Donald J. Trump will start tweeting any time oil hit these levels. I expect RIG to move dramatically up, as we approach those multi year resistance levels in crude oil.
Trade set Up:
For this trade i recommend buying in at 3.8, with a stop loss at 3.2, and a price target of 5. At 5 I would add to the position and move the stop loss up to 4.5.
From this point I would not add to the position until the 7.2 resistance level is broken up.
For trailing stops i recommend the low of the trailing 5 day bar.
RIG/N trade ideas
Breaking 3.70 Resistance soon ?It appears that RIg is attempting to get out of the 3.70 resistace. Its made multiple attempts now, with the last one quickly being rejected. It appears the stock is moving slowly towards resistance, which should be enoug energy to smash through. Now it needs a catalyst.
Oil was pushed down after europoors decided to go on lock down again. There was hope the opec + meeting would push oil past (WTI) past 62, but that failed, as seen by todays (4%) down day in XLE. There is no more major catalyst, whcih could send the stock higher. SO what will push the stock higher?
1. Higher Demands is seen coming this summer.
2. 90% of American should be vaccinated this month ( have the option to get vaccinated)
3. European lock downs should end this month, whcih should bring some excitement to the oil market.
Downsides?
The major downside that I see is OPEC+ increasing supply faster than demand rises. They decided to raise supply in anticipation of higher demand, but if they supply and demand is matched or undermatched we would soon see supplies and inventories rise
above the 5 year average. While not a sure trade I think it offers a handsome return to anyone who dares trade this.
RIGOpened a position on Tuesday after that second bounce off the 200 period moving average. Price action has held above the 8 EMA after an anticipated pullback and bounce. Today we see 8 EMA and 20 MA x-over. If you're looking for an entry, consider the 8 EMA (pink line) or first pullback to the 20 MA. Cheers!
Breakout from cup without handle? Testing major resistance.Currently testing resistance at $3.88, if it breaks out I see it hitting $5.35 in the next two weeks and $5.80 by the end of March. If it breaks through the red resistance trend line, it'll already be too late to buy. This is a $6 stock mid-April at the latest.
I believe we saw a cup without handle from August to November, huge volume on breakout. Could be looking at big gains from here on.
Now looks like a good time to buy. I don't see it getting back down to these prices any time soon.