An investment theme I am starting to get very bullish on is Shipping and Tanker Stocks. Most stocks related to that sector have been decimated and trade at a fraction of their all time highs. This is obviously problematic as this is not exactly an ATH momentum trade type of situation. Nonetheless momentum has clearly started to emerge with quite a few stocks belonging to the shippers group. Although almost none of them are trading near all time highs, a notable exception is the recent IPO – NVGS, a lot of them have taken out their 52 week highs. This is what I refer to as ‘no immediate overhead resistance’. The idea is that selling pressure shouldn’t kick in with a vengeance as a long enough base has been built and those who wanted to sell have sold their position and those still in are most likely strong hands that will hold for further price appreciation.
To make a long story short, here is my weekly chart technical analysis of DRYS – Dryships one of the big cap shipping stocks out there. The pattern you can see is a bullish inverted head and shoulders pattern. Most stocks within that sector display a similar pattern. As noted in the chart FRO – Frontline and SBLK – Star Bulk Carriers are my favourite stocks within that sector. I have a position in both. If you don’t want to bother with single stock risk there’s a way to get exposure to the whole sector using an Exchange Traded Fund: SEA – Guggenheim Shipping ETF
I am not trading any kind of belief here. The sector caught my attention because individual stocks kept popping up in my technical scans. I am just following the money and trading a high odds situation. If we get more follow through this will be the beginning of a new trend that could be significant due to the previously mentioned long-term bases most shipping charts are displaying. In order to be prepared and to facilitate due diligence I have already compiled 3 shipping sector overview charts. These charts are of great help when it comes to identifying the leaders and also to keep track of relative strength of individual stocks compared to their peers. It obviously is a great tool to generate trading ideas if you haven’t done any research for a specific sector yet.
List of the shippers contained in those charts (updated 12/26/13):
SEA – Shipping ETF, DSX – Diana Shipping, ANW – Aegean Marine Petroleum Network, STNG – Scorpio Tankers, TK – Teekay Shipping, SFL – Ship Finance International, NM – Navios Maritime Holding, NVGS – Navigator Holdings, FRO – Frontline, DRYS – Dryships, SBLK – Star Bulk Carriers, TNK – Teekay Tankers, SB – Safe Bulkers, BALT – Baltic Trading, DHT – DHT Maritime, GSL – Global Ship Leasing, VLCCF – Knightsbridge Tankers, PRGN – Paragon Shipping, SALT – Scorpio Bulkers, CKH Seacor Holdings, NAT – Nordic American Tanker Shipping, EGLE – Eagle Bulk Shipping, GNK – Genko Shipping & Trading, ESEA Euroseas Ltd.
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