Atwood Oceanics, Inc. (NYSE: ATW)

Atwood Oceanics, Inc., an offshore drilling contractor, engages in the drilling and completion of exploratory and developmental oil and gas wells. The company owns a fleet of approximately 11 mobile offshore drilling units primarily located in the United States, Gulf of Mexico, the Mediterranean Sea, offshore West Africa, offshore southeast Asia, and offshore Australia. It also has three ultra-deepwater drill ships, and two high-specification jack ups under construction. The company was founded in 1968 and is headquartered in Houston, Texas.

To review Atwood’s stock, please take a look at the 1-year chart of ATW (Atwood Oceanics, Inc.) below with my added notations:

1-year chart of ATW (Atwood Oceanics, Inc.)

ATW has formed a key level of support at $54 (blue) over the last (3) months. In addition, the stock has created a trendline of resistance (red) starting in the beginning of August. These two levels combined have ATW stuck within a common chart pattern known as a descending triangle. At some point, the stock has to break through one of those two levels.

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The Tale of the Tape: ATW has formed a descending triangle. A short trade could be made on a break of the $54 support. A break through the downtrending resistance level, which currently sits near $56, would set up a potential long trade.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!

Good luck!

Christian Tharp, CMT

Follow me on Twitter: @cmtstockcoach