The Old Bull and the SEA

The following is just a small excerpt from my latest Weekly Strategy Session (please click on that hyperlink for details about trying it out). which I published for members and 12631 subscribers this past Sunday. 

If you traded back during the last cyclical bull market, from 2003-2007, you will recall that the shippers and tankers were potent late-stage movers, catching nice momentum in the final innings of that bull. 

After a complete wipeout in late-2008, followed by glaring underperformance in the current bull in recent years, though, the space seems to be heating up, once again. Observing the Guggenheim Shipping ETF weekly timeframe, the potential for a major bearish-to-bullish reversal is respected. Note the recent breakout and subsequent sideways base consolidation over the 2012 highs. 

The $19.30 level on this ETF almost assuredly will now need to act as firm support, on a weekly closing basis, in order for the constructive action to continue. Upon upside resolution from the current, tight consolidation, there is a considerable amount of ground (or water) to cover above for a strong breakout before overhead supply would presumably kick in over $25.

In terms of specific stocks in the space, Navios Maritime is one of the top names in the Guggenheim ETF. Observing the daily chart, I would not be inclined to chase the stock early this week. However, the bullish action is quite impressive, with a high buy-volume price breakout to the upside from a long, sideways consolidation.

Thus, I would be stalking a potential slight pause, or “bull flag,” for a few days of resting sideways or slightly down, before seeking to enter on the long side. I want to see $8.85 now act as firm support in order for this thesis to stay intact.

Scorpio is a tanker which has been in a strong uptrend all year. The weekly chart indicates the past several weeks have seen an orderly pullback away from well-defined resistance (purple line).

Going forward, strength up and out of this consolidation has me looking at STNG as a long idea; a candidate for a major breakout.

Also impressive and actionable on further strength as long ideas are: BALT PRGN. And keep DRYS on watch.

Baltic Trading is flirting with a well-defined $5.70 breakout above (light blue line), since clearing a multi-month falling channel (purple lines). Paragon has seen a notable uptick in buy volume as it attempts to end a multi-month corrective phase via an upside breakout.  

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