McDermott International (NYSE:MDR) – Technical Analysis


Dallas, Texas 04/21/2014 (FINANCIALSTRENDS) –  Mcdermott Internationa l(NYSE:MDR), the oil & gas company, closed the day $6.87 up 0.44% over the previous close. The candlestick pattern in the daily charts has formed a bearish reversal pattern. The RSI (14) at 34.25 indicated downside momentum left. The fast stochastic (%K) at 9.91 is deep in the oversold region and has been continuing for the past 2 weeks which has not occurred earlier. The MACD (12, 26, 9) is also deeply negative and until a reversal occurs, the trend will be bearish. The intra-day sell target will be $6.64 with stop-loss at $7.00. There are no divergence indications in MACD currently.


Figure: Daily chart for Mcdermott International (NYSE:MDR)

The weekly charts of Mcdermott International (NYSE:MDR) indicate a long downtrend starting from October 2012 and still continuing. The exponential moving average (100) has been acting as a resistance to the price. As long as the price does not breakout above $9.70 (EMA 100) bearish trend is expected to continue. The intermediate trend (2-3 weeks) is bearish for target $5.50 (S2) with stop-loss at $8.50 (EMA-50). The RSI at 34.30 also indicates downside momentum to continuefor a couple of weeks, after which there will be recovery with the price swinging to previous resistance of $9.70 (Fibonacci Pivot Level). For a period of (1-2 months) the stock can be bought for a target $12.30 with stop loss at $5.50 (S2).


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The earnings estimate for Mcdermott International (NYSE:MDR) for upcoming March quarter as well as the year has been downgraded by many analysts to a negative 12 cents per share. A recent operational update of the oil & gas company on March 31, 2014 stated that profit booked from recent backlog of projects will not cover previous restructuring costs. This will result in higher losses and hence the stock has been in a downtrend.