Wednesday, June 9, 2010

Diamond Offshore

The contrarian never sleeps. Is the gulf disaster creating buying opps yet?
So far you've had to be pretty nimble. I did profitably go long BP calls last week ...but only held for about 28 hours. DO may be ready to provide a pop here that lasts a little longer and carries a bit further.
click to enlarge
Note the volume spike on the last candle, and apparent positive divergence on the RSI.
The wave labeled 3 also  appears to have a complete 5 waves down , or very nearly so.
The 2009 low was 47.09.
click to sharpen and enlarge

Note the classic gaps, a break away gap on Apr.22., continuation gap on Jun 1, and  what may become an exhaustion gap yesterday.
If this stock were to put in a new low very short term, with additional positive divergences, it would be providing a very nice opp to enter for the 4th wave retrace. (see first daily bar chart) which could certainly carry to the $70's.
Alternatively it might not offer that easy entry and just close yesterdays gap drawing in short covering on a move above 59 (remember the volume spike).






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