Transocean's Gap Covering Is a Bullish Signal

Transocean (RIG) spiked 5% at the news of its potential merger with GlobalSantaFe (GSF) last week, but 4 days after the news, the stock came back at pre-news levels yesterday.

This is surprising considering that all the big oil companies shared one consistent theme when they reported earnings last week - that production was lower. Conoco Phillips (COP), Chevron (CVX) and Exxon Mobil (EXM) echoed the same sentiment made apparent by their lower than expected production levels.

While RIG went up last week on huge volume, the pull back has been on significantly lower volume, and any technician will tell you that the gap covering between $110 and $116 is a bullish sign.

Drillers are definitely the only kind of oil plays that are still in favor and RIG, with its looming merger with GSF, is a buy at current levels.

RIG 1-yr chart:

Comments

[hackerpx]

I own 1400 shares of EXM and was under the impression that I had purchased a shipping company called Excel Maritime. Now I am informed that I own Exxon Mobil. What gives anyway?