FRO Frontline Shipping Stock – Bottoming Tails Cluster Stock Chart Pattern

by Olivier on February 23, 2014

Reviewing FRO – Frontline with an updated chart and my technical analysis thoughts. As outlined in a recent post I still think the Shipping Stocks Turnaround Investment Theme will play out. In the aforementioned post I analyzed the big cap stock DRYS – Dryships. At the time I stated FRO – Frontline and SBLK – Star Bulk Carriers were my favourite stocks within the sector. FRO is now turning out to be the one I want to have exposure to going forward.

In my chart annotations I point out a bottoming tails cluster. That simply means price is hammering out a bottom. Price repeatedly hits a certain price level and each time it does, support holds and price moves higher again. The recent candlestick cluster displaying bottoming tails would define the lower trendline of an ascending triangle if FRO were to move up from these levels. I think this is a high odds proposition as the weekly MA 30 is acting as strong support and upon completion the ascending triangle would be considered being the right shoulder of an inverted bullish head and shoulders pattern. The contracting volume during the recent consolidation pattern so far supports that bullish assumption. A stop loss could be placed below the recent low at 3.47. A close below that price would invalidate my bullish scenario.

FRO – Frontline. Click on the chart to maximize:

Always up-to-date Shipping – Sector Overview Chart

Company description from Yahoo finance:

Frontline Ltd., through its subsidiaries, engages in the ownership and operation of oil tankers. The company provides seaborne transportation of crude oil and oil products, as well as raw materials, such as coal and iron ore. Its very large crude carriers (VLCCs) primarily transport crude oil from the Middle East Gulf to the Far East, Northern Europe, the Caribbean, and the Louisiana Offshore Oil Port, as well as Suezmax tankers trade in the Atlantic Basin, the Middle East, and Southeast Asia. As of February 21, 2013, the company’s tanker fleet consisted of 48 vessels, including 34 VLCCs and 14 Suezmax tankers. It is also involved in the charter, purchase, and sale of vessels. The company has operations in the Bahamas, Bermuda, the Cayman Islands, India, the Isle of Man, Liberia, Norway, the United Kingdom, and Singapore. Frontline Ltd. was founded in 1948 and is based in Hamilton, Bermuda.

The most important rule of trading is to play good defense, not great offense. Every day I assume every position I have is wrong. I know where my stop risk points are going to be. I do that so I can define my maximum possible draw down. - Paul Tudor Jones



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