Oceaneering International Inc. (OII) has broken a long-term downtrend line. Let me say that one more time -- OII has broken a long-term downtrend line.
When a security breaks a long-term trendline, you need to take notice. It does not matter whether it is a stock or bond or commodity or a currency. You need to take notice and ask what is going on -- what is the market focusing on in the next quarter? Get it?
In this Point and Figure chart of OII, below, we can see a downtrend from 2014. The rally to $23.00 broke this long-term downtrend. A price target of $31 is indicated -- but we will return to that later.
In this longer-term weekly bar chart of OII, below, we used a log-scale because prices suffered such a large decline. OII is likely to close above the 40-week moving average line.
In this daily bar chart of OII, below, we can see a pattern of lower highs the past year. The pattern of lower lows ended at the end of October. In November and December, OII did not make a lower low, and this month prices rallied above the highs of November.
OII is now above the rising 50-day moving average line and only about $1 below the still-declining 200-day line. The volume pattern suggests that there was some "throw in the towel" selling at the end of October, and that buyers are being more active this month.
The On-Balance-Volume (OBV) line has been rising since the middle of November, which tells us that buyers of OII are being more aggressive.
The Moving Average Convergence Divergence (MACD) oscillator gave a cover-shorts buy signal in November and an outright go long signal in the end of December.
In this weekly chart of OII using an arithmetic scale, below, we can see that prices are close to closing above the 40-week moving average line. The weekly OBV line needed to turn up while the MACD oscillator has signaled a cover-shorts buy on this timeframe.
Bottom line -- aggressive traders could go long OII at current levels and add on a close above $24. Use a $19 sell stop, and $31 is our first upside price target.
