Bronco Drilling Company shares are up about 4% as the closing bell approaches, thanks to an upgrade from Calyon Securities. The brokerage firm boosted its rating on BRNC from neutral to add, and also lifted its price target to $17 per share. Covering analyst Mark S. Urness cited Bronco's recently announced acquisition of a 25% stake in Challenger Limited for $5 million in cash and 6 drilling rigs. (In exchange, Challenger is purchasing 4 rigs and other equipment from Bronco for $12 million.) Urness said that the agreement is a smart strategic move for a small company that provides both growth and diversification benefits.

Today's gains have BRNC trading just a hair's breadth above its 10-month moving average, a trendline that has stifled the shares consistently since May 2007. Short-covering support could be fueling today's gains; as of the most recent reporting period, 16.2% of the stock's float had been sold short, an accumulation that would take more than 13 trading days to fully eliminate.

If the stock continues to climb higher, a bullish cross of its 10-week and 20-week moving averages could also provide support. Last Friday, BRNC finished atop these 2 trendlines for the first time since May 4 and it's poised to do so again this week, if it can cling to today's gains.