Transocean Ltd. (RIG) Stock Moves Down and Here’s Why

Transocean Ltd. (NYSE: RIG) shares fell in early trading yesterday lower trade volume than normal after a number of analysts weighed in on the investing value of the stock with a downgraded rating.

Meanwhile, U.S. stocks edged lower Monday, with major indexes retreating from record levels.

The Dow Jones Industrial Average DJIA, -0.31% fell 48 points, or 0.2%, to 19,916, while the S&P 500 index SPX, -0.29% lost 5 points to 2,272, a drop of 0.2%. The Nasdaq Composite Index COMP, -0.03% rose 4 points to 5,529, a gain of about 0.1%.

Analysts at Bank of America Corporation downgraded shares of Transocean Ltd. (NYSE: RIG) from Neutral to Underperform in a research note to investors today. The company currently has a rating of Underperform on the stock. The one-year price target of $11.68 is a decrease compared to the opening price of $15.40, that has caused a number of other analysts to issue statements on the company recently. Looking back over the last year, Transocean Ltd. stock has a high of $16.66. Downgrades occur when analysts feel that the future prospects for the security have diminished from the original recommendation, usually because of a considerable and fundamental digression in the company’s actions, future vision or industry.

Shares of Transocean Ltd. (NYSE: RIG) opened at $15.40 yesterday and traded in a range between, $15.09 and $15.41, and last traded at $15.24, a dip of $0.53 from the previous closing price.

Transocean Ltd. (NYSE: RIG) now has a market cap of 5.57B.

Transocean Ltd. (NYSE: RIG) Average Daily Trading Volume

The stock’s average daily volume is 14,123,600 shares out of a total float 365,278,000 and some 2,188,730 shares crossed the trading desk yesterday, 68 percent lower than the average. lower than normal. Look for trading volume to pick up in the coming days as momentum traders often use swings in trading volume to identify heavy volume accumulation or distribution by institutional investors.

While increased trading for short periods will not mean much will not mean much, conversely, a trend of heavy trading volume on the buy side over a period of days or weeks sends a positive signal to market traders that institutions may be moving in, so institutional sponsorship is very important.

Institutional sponsorship just refers to ownership of a stock by mutual funds, banks, pension funds and other large institutions.

Professional investors such as these retain teams of analysts that investigate thousands of stocks. So watching their interests is a good way to make sure you are buying the right stocks.

Transocean Ltd. (NYSE: RIG) Moving Averages

A moving average can also act as support or resistance. In an uptrend a 50-day, 100-day or 200-day moving average may act as a support level, as shown in the figure below.

This is because the average acts like a floor (support), so the price bounces up off of it.

In a downtrend a moving average may act as resistance; like a ceiling, the price hits it and then starts to drop again.

By identifying trends, moving averages allow investors to make those trends work in their favor and increase the number of successful trades.

Trades for Transocean Ltd. (NYSE: RIG) have ranged from $7.67 – 16.66, and the stock now has a 50-day MA of $14.08 and 200-day MA of $11.34. Today’s last price is 8.52%% below the 52 week high of $16.66.

Earnings growth is a crucial factor to look at when investing in stocks and investors identify companies that have increased their earnings at least 25% or more for a 3 year period.

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