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…it means Genco Shipping sleeps with the fishes.
To those who consider GNK to be a great value play, as well as best in breed with respect to the shippers, the price action must seem downright ghastly. As the weekly chart illustrates below, we just saw a breakdown out of the bearish descending triangle dating back to November of 2009. Unless this is a false breakdown, a test of key support dating back to early 2009 in the $10/$11 range cannot be ruled out. Despite the fact that I expected shippers to outperform at various points throughout the year, I will not disrespect price action this powerful.
Moreover, with respect to my previous post about China being at a critical juncture, further weakness in the shippers adds fuel to the bearish China thesis.
Bottom-callers Beware.
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Shipping stocks are stupid.
What about the bearish Everything Else Thesis?
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No such thing.
Jake,
Quite the extrapolation, indeud (sic).
despite having one of the best mgmt teams and maintaining guidance through a ridiculous inventory correction, tsl was absolutely destroyed – though not as bad as gnk right now – during the bearish winter of 08/09. end of solar/no need to ever invest in energy generation again/chinese stocks aren’t real/blah blah blah.
It marked levels near $4 in 08/09, and on a valuation basis easier than gnk’s right now. it trades at $28 now, and is still arguably stupid cheap.
go ahead, short gnk. no one will ever need shipping again. and the bdi will never recover again. everything will travel by mule train and UPS – no ships involved.
Now, now, robert. No need to taunt. Hindsight is 20/20. Easier said than done to hold TSL all the way down and ride it back up. Let’s suppose I completely agree with your GNK thesis, and the fact that shipping will not become obsolete. I can still take the other side of the trade and respect the price action in the mean time.
Sorry – not meaning to taunt. Just pointing out that when valuation is this far out of whack, an entry now is not a bad idea. Obviou
sly, waiting until it settles is a better idea, but anything at these levels is not bad if you are willing to hold for a while.
It may take 4-6 weeks for GNK to form a base consolidation. Or it could happen alot sooner. Regardless, if you can wait, it will recover.
Or it could continue its prevailing trend lower, which it seems intent on doing now.