Many people (including me) have scratched their heads over the past few years, looking for reasons to play the shipwrecked shipping stocks. Each and every time, though, the trade simply was not there and the stocks fell further. Genco Shipping was the poster child for that analysis. However, each intelligent value investor who bought GNK was forced to eat crow until the stock became persona non grata at value conferences and coffee shoppes where value guys get together and buy the cheapest and most heinous-looking pastry in the window, if only to indulge their contrarian nature.
Despite them being about as forgotten and out of style as can be, the shippers are finally showing a pulse for at least another attempt to change character. On the weekly chart of Genco, below, consider the bullish RSI divergence that took its sweet old time playing out for several quarters, specifically from summer 2011 until this past summer. This is the best shot bulls have had in years to follow-through, likely now needing a break above $4.50. True, that is still a significant percentage above current price, but the rubber band can snap back awfully hard and fast (see RIMM pre-earnings).
I will be covering another shipper that looks to be an even better set up than Genco in my Weekly Strategy Session. So, be sure to sign up for that and much, much more.
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The value guys ugly pastry buying scene is too funny.