Tuesday, April 21, 2009

Baltic Dry Index

is making a small but unmistakable upturn, putting in a higher low.

Not many people (except in a certain TV network well known for its market optimism) predict a quick turnaround in global trade which has absolutely collapsed. Still, the index, a daily average of prices to ship raw materials, is considered to be an indicator of economic activity, and an uptick does represents an increased shipping activity which may be a precursor to production.

I've been monitoring bulk shippers, but they are a wild bunch. Stock prices can easily go up 10% in a day, only to crash back 15% the next day. Most of them corrected more than 90% from their highs.

DRYS: up 9.4% for the day
DSX: up 7.6%
EGLE: up 11%
EXM: up 6.7%

Many of the bulk shippers seem to be priced in for bankruptcy, which could still happen if the credit contracts again and global trade collapses even further. Another uncertainty is excess capacity. New vessels are coming in, which were ordered at the height of the commodity boom (or bubble as some call it) last year.

12:16pm update
Looks like DRYS may join my "Shoulda" stock list... Up almost 12% for the day. Darn!!

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