A Line In The Sand For RIG

A couple of weeks ago, I wrote about Transocean, Inc. (RIG).  I was commenting on the fact that the stock was setting up for a potential rally and we should watch it for a breakout.  Well, we never bought it and that break out never came.  In fact, today, it’s breaking down.  Currently, the stock is down almost $4 per share.

You can see from the chart below where the line in the sand is for a breakout.  It just couldn’t get there.  I still like the company but it’s failed and now we move on to the next one.  This is an example of why we wait for the charts to confirm a reason to buy the security.  If we would have been impatient and purchased RIG at $62, we would have already lost $9 per share.  Great company, bad chart.

rig-3-5-09

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