Found A Diamond in the Ocean – Diamond Offshore Drilling

• Posted by Greg Harmon
• on May 25th, 2016

Remember that scene from Titanic when Rose threw her heart shaped blue diamond into the ocean. Well I did not find that diamond. But I may have found one more valuable in the stock of Diamond Offshore Drilling.

The chart below tells the story. Diamond Offshore stock ($DO) had sunk almost to the bottom of the ocean.From a high over $76 in February 2013 it plummeted to a low under $15 in January. Almost 4 years of falling prices. It had some pauses and small bounces along the way, but since August 2013 the falling 200 day SMA halted any and all attempts to come up for air.

The chart shows that in July 2015 something changed though. It started moving mainly sideways, like it was drifting along the bottom of the ocean floor. That drift continued for 10 months. Things started to look a bit more positive in March when the price popped above that 200 day SMA. And then again in April as the 50 day SMA crossed up through the 200 day SMA, a Golden Cross. But today something important happened. Wednesday the price action moved above that 10 month range.

This may be the start of a recovery mission. Envision Bob Ballard in a mini sub coming across that blue heart on the ocean floor. Momentum indicators are looking positive and support continued price action higher. The RSI is in the bullish zone and rising while the MACD is crossing up. There is no telling if it will make it back up to the surface, but it certainly looks like the visit at the bottom is over.

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