Sector Watch: Shipping Stocks

Shipping stocks went the way of the market capping a two day sell-off as traders were nervous holding positions ahead of a holiday weekend. The Baltic Dry Index, which measures dry bulk shipping rates, had hit record highs earlier in the week. The index trades on the London exchange and reached 11,783 before falling back to 11,465 on Friday.

That is nothing compared to the 50% plunge the BDI experienced from November to a low of 5,600 by the end of January. Despite the volatility the BDI is seen as a good indicator of future economic growth and productivity.

The sector is exciting to follow so here is another “Watch List” that I have created on stocks that usually move with the BDI. I believe the uptrend continues over the next few months as a number of factors come into play that will be positive for the bulk carriers. All five of these stocks have options and quotes are from Friday.

DryShips (DRYS, $90.05, down $2.08). The stock hit a low of $55 mid-March and doubled to $110 by May 16. In fact, the stock made a move from $90 to $110 back to $90 in the month of May already.

Eagle Bulk Shipping (EGLE, $32.30, up $0.26). One thing that struck me with this one was the action in the July 35 calls (QEKGG, $1.40, up $0.15). Eagle’s 52-week high is $36.24 which was hit on May 19.

Excel Maritime Carriers (EXM, $47.86, down $2.64). Fell 13 points or 20% for the week.

Navios Maritime Holding (NM, $12.89, down $0.19). In a weird twist, Navios was up 6% in after-hours Friday. There was no “big” news other than the company saying it would be reporting earnings this Thursday.

TBS International (TBSI, $45.92, down $1.57). The company did a 3.4 million share offering on Thursday at $51 per share that closes Wednesday. The timing looks bad, sure, but the demand was there.

Although these stocks are in a downtrend and I’m bullish longer-term, I wouldn’t rush to buy any of them just yet. Let the market open this morning and see if the fallout continues for another day or two. If we get lower opens for these stocks and or options, any entry points you may have can be lowered.

Rick Rouse
Rick@OptionsMentoring.com

]]>

Leave a reply Cancel reply

CFTC Disclosure:

GOVERNMENT REGULATIONS REQUIRE DISCLOSURE OF THE FACT THAT WHILE THESE METHODS MAY HAVE WORKED IN THE PAST, PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE PERFORMANCE. WHILE THERE IS A POTENTIAL FOR PROFITS THERE IS ALSO A RISK OF LOSS. A LOSS INCURRED IN CONNECTION WITH Momentum Options Trading, LLC CAN BE SIGNIFICANT. YOU SHOULD THEREFORE CAREFULLY CONSIDER WHETHER TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CIRCUMSTANCE. THERE IS SUBSTANTIAL RISK IN TRADING. A LOSS INCURRED IN CONNECTION WITH FUTURES TRADING CAN BE SIGNIFICANT. WE MAKE NO CLAIM REGARDING PAST OR FUTURE PERFORMANCE. WE MERELY TRACK EVERY TRADE AND SHOW THE PERFORMANCE OF ALL TRADES THE SYSTEM OR NEWSLETTER PRODUCES. SIMULATED TRADING IS DIFFERENT THAN TRADING REAL MONEY. HYPOTHETICAL RESULTS ARE NOT REAL RESULTS. PLEASE CONTACT YOUR BROKER ABOUT THE RISK OR TRADING STOCKS, OPTIONS OR FUTURES. ALL COMMUNICATIONS ARE OPINIONS NOT ADVICE.

CFTC RULE 4.41 – HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.

Blog