Interactive Investor

Follow this stock that has real momentum says analyst

3rd August 2022 07:31

Alistair Strang from Trends and Targets

Nothing like this has happened before, believes independent analyst Alistair Strang, which is why this share should prove worth watching in the weeks and months ahead.

As one of the guilty party in the Deepwater Horizon disaster in the Gulf of Mexico, the Transocean Ltd (NYSE:RIG) share price has taken a hit since 2010. The corrosion of their share price has actually been worse, the rot starting in 2008 and proving pretty relentless in the years since.

However, something interesting appears to be happening, and share price movements are worth paying attention to.

The Blue line on the chart below dates all the way back 14 years and, suddenly, the stock market decided the share price deserved being gapped up above this long-term historical downtrend. Equally puzzling is the presence of the Red uptrend since 2020’s pandemic lows.

As the chart inset shows, the share price was also gapped up, regaining this uptrend.

Past performance is not a guide to future performance.

Usually, in the grand scheme of things, we get quite excited when a price is gapped up above its Red uptrend, this generally providing a reliable signal for happy times ahead.

We’re always slightly less optimistic when a price is gapped above a Blue downtrend, this sort of movement often being at the mercy of overall market conditions before things come to fruition. In this particular case, we’re at a loss as we cannot recall an instance when both things happened at the same time.

The immediate situation certainly allows for some real optimism, suggesting ongoing traffic above $4 should trigger price recovery to an initial $5 next. If exceeded, our longer term secondary calculation works out at a visually sane $7.3. The picture from the chart certainly suggests a risk of hesitation, should $7.3 make an appearance.

For everything to go badly, the share price now needs to drip below $2.4 as this would transport it into a zone where “bottom” calculates as a visit to $1.12.
We really suspect Transocean Ltd should prove worth watching in the weeks and months ahead.

Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.

Alistair Strang is a freelance contributor and not a direct employee of Interactive Investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang or Interactive Investor will be responsible for any losses that may be incurred as a result of following a trading idea. 

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