Oil Stock Sending Up Bull Alarms

RDC's 320-day trendline has had bullish implications in the past

Nov 19, 2018 at 10:58 AM
facebook twitter linkedin

Energy stocks have taken a big hit during the recent rout in oil prices. One name that has taken a particularly bruising hit is Rowan Companies PLC (NYSE:RDC), with the shares of the Texas-based offshore drilling firm down 29% from its Oct. 9 nearly two-year high of $20.87 to trade at $14.83. However, RDC is now trading near a trendline that's marked attractive entry points in the past, suggesting it could be time to buy the dip on the oil stock.

Specifically, Rowan stock is trading within one standard deviation of its 320-day moving average after trading above it 60% of the time over the past two months -- and in eight of the last 10 trading days. According to Schaeffer's Senior Quantitative Analyst Rocky White, there have been four other times since 2015 this signal has flashed, translating into an average one-month gain of 10.9%.

rdc stock daily price chart nov 19

On the sentiment front, short interest has been cut in half since topping out at a year-to-date peak of 19.8 million shares in mid-April. The 9.34 million RDC shares currently sold short represent 7.5% of the stock's available float, or 2.4 times the average daily pace of trading.

Analysts, meanwhile, are mixed toward the oil stock. While eight of 14 maintain a "hold" or "strong sell," the average 12-month price target of $19.78 is a 33.2% premium to current trading levels.


If you are not making money with options, you aren’t buying options like this…

There is no options strategy that more perfectly approaches trading the fastest moving and most volatile stocks available in the marketplace than this one. In fact, there is no strategy that better utilizes put options for optimal returns and a real trading edge over other traders in the exact same market. New options traders fail out at an incredible rate without proper trade research, execution timing, and option picking. Capitalize on Schaeffer’s 100+ years of options trading excellence with the most coveted product launch in company history. Don't waste another second... join us right now before the next round of trades are released!



Special Offers from Schaeffer's Trading Partners