Traders Should Short a Sinking Transocean

RIG saw declining volume on recent rally; momentum is overbought

   

Traders Should Short a Sinking Transocean

Transocean Ltd. (NYSE:RIG) — On May 8, when the stock was trading around $48.50, the Trade of the Day identified a breakdown in its chart and recommended selling with a downside target of $38 to $40. 

On June 5, RIG hit our target with a low of $39.32, reversed, and recovered back to the bearish resistance line within a channel down. Then the stock flashed a bearish “death cross” in mid-May, had declining volume on the recent rally, and momentum is now overbought. 

Sell RIG short at $45 or higher. The downside target is $39 to $39.50. As with all short sales, check with your broker for special margin requirements. Short-selling by its nature is a speculative technique. A buy stop order should be entered at $48 to protect against potentially unlimited losses.

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chart key Traders Should Short a Sinking Transocean


Article printed from InvestorPlace Media, http://investorplace.com/2012/06/trade-of-the-day-transocean-ltd-nyse-rig/.

©2014 InvestorPlace Media, LLC

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