Photo by David Thielen on Unsplash

TM Editors' note: This article discusses a penny stock and/or microcap. Such stocks are easily manipulated; do your own careful due diligence.

Commodities is the name of the game right now - two of the world's most important commodities powerhouses are at each other's throats.

But wild swings up can always be followed by big drops down - both West Texas Intermediate and Brent crude dropped under $100 a barrel on Monday.

You know the old saying about a rising tide lifting all boats... well, it works the other way, too, and a lot of major names in the petroleum industry have dropped as well.

The current dip is driven by a bunch of different factors - higher production from OPEC, ongoing diplomatic talks between Russia and Ukraine, and a potential downturn in demand from China, the biggest oil importer in the world, where they're locking down the manufacturing powerhouse of Shenzhen.

These kinds of shifts are common for any commodity stock, which is why a lot of people trade them rather than looking at them as long-term holds. For me, these kinds of swings are fertile ground for finding opportunities in small-cap stocks, which tend to produce larger proportional returns in response to volatility.

Right now, a major offshore oil drilling contractor is trading around $4 thanks to the falling price of crude, and my charts tell me it's hit a critical buy-in point for quick profits...

This Company Drills More Oil Than Anyone

Transocean Ltd. (RIG) was formed out of a merger of several oil and natural gas companies in the United States and the acquisition of a Norwegian firm, to create a company capable of doing massive drilling operations with a global reach.

Its clients include all of the largest oil producers globally - Royal Dutch Shell and Chevron accounted for over 40% of its revenue in 2019. Recent acquisitions have expanded its capabilities in harsh environment drilling, and it is the largest offshore drilling contractor in the world by revenue.

Right now, it's beautifully positioned to profit as countries scramble to look for oil outside of Russia.

The recent slip in oil prices knocked it down a peg, to put it politely. This stock had been riding above $5 last week, but it got swept up in selling Monday and Tuesday. At the time of writing, it's hovering right around the $4 mark.

We're coming up on an excellent window in which to buy, and I'll show you why on this chart:

Here, you can see the convergence of three things:

• An RSI at 48, indicating that the stock is pushing into oversold territory.
• 50-day moving average at $3.63 and trending up.
• 200-day moving average at $3.63 and mostly level.

If the 50-day average pushes above the 200-day threshold, we're in a classic pattern we call a "golden cross," which indicates the potential for a major jump in share price. They don't always bear out, but in this case, I think it's a good bet.

Transocean is, simply put, a cornerstone of the oil industry at this point. If talks between Russia and Ukraine break down for any reason (which is not just possible, but likely), other oil firms are going to be depending on Transocean to help increase supply - remember, it operates well outside of Russia and the conflict zone. On top of that, we'll see another spike in the price of oil that'll push a buying surge on energy stocks.

Either of those things could send RIG through the proverbial roof, and because it's a small-cap, it doesn't have to move far to bring in big returns.

My readers know that these kinds of plays are my specialty.