Transocean Ltd. (NYSE: RIG) — This international provider of offshore contract drilling services has been in a broad “W” sideways movement since 2008.
The chart below shows only the last rally from July 2010. But similar rallies have failed over the past three years, and each time the stock has fallen back to support at under $50. Additionally, insiders have been heavy sellers of the stock over the past 12 months.
In March, RIG broke through its bullish support line (red dashed line) at $80, and this week, the stock closed below its 20- and 50-day moving averages (green and blue lines) for a strong sell signal. The stochastic (an overbought/oversold indicator) flashed a sell signal last week.
Investors should sell holdings of RIG. Short sales and bearish strategies may be initiated with a target of $68, the stock’s 200-day moving average (red line).
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