Let take a look at oil chart first.I am charting US Oil Fund (USO).

It seeks to reflect the performance, less expenses, of the spot price of West Texas Intermediate (WTI) light, sweet crude oil. The fund will invest in futures contracts for WTI light, sweet crude oil, other types of crude oil, heating oil, gasoline, natural gas and other petroleum based-fuels that are traded on exchanges. It may also invest in other oil interests such as cash-settled options on oil futures contracts, forward contracts for oil, and OTC transactions that are based on the price of oil.

Source : Yahoo Finance

US Oil Technical Analysis vs Keppel Corp

USO has been dropping, and forming lower low and lower high. The trend is still down and so far no end in sight.

Now let take a look at Keppel Corp, one of the world’s largest builders of offshore oil rigs.

Is there a buying opportunity based on Keppel Corp ?

Clearly, there is a divergence between the 2 charts.

I can think of 3 reasons, why this is happening?

1) Keppel Corporation (also known as Keppel Corp) is a Singaporean company that specialises in marine, property and infrastructure businesses.^[4]With a 32% rise in net profit in the third quarter of 2013, Keppel Corporation is one of the largest conglomerates in Singapore and one of the world’s largest builders of offshore oil rigs.^[5]

Source: Wikipedia

The company is also have a property and infrastructure business which may buffer the drop it the off shore rigs business.

2) Oil price may be excessive as they are many traders unwinding their trading position. The price may over shoot the fundamental of the stock.

3) Window dressing of the end of the year. This is possible as the rise in Keppel Corp in recent week is accompanied with low volume. There is a divergence between price and volume.

So technically is a possible buying opportunity? I will personally wait for a higher low to be form first between 8.80 and 8.00. Once the low is formed. I may start looking to buy. A confirmation will be a break of the swing high now which currently stands at 8.80 region.

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