The Sea is a Fierce and Fickle Mistress to Shippers

• Posted by Greg Harmon
• on July 5th, 2011

“The Greek government is desperately in search of additional sources of revenue, the two largest industries in Greece are tourism and shipping. Expect a large increase in taxation and tax enforcement upon these sectors. The market is already pricing much of this in, but Greece is a unique strategic location in the shipping industry; therefore, expect these companies to bite the bullet and pay up.” – Robert Sinn @StockSage1

Sometimes the obvious impact of macro economic events plays out as anticipated in the price action of stocks. The quote above refers to the shipping industry but is focusing on world wide ocean based shipping. Where the Greeks have a significant share of the market. As Robert states a tax increase’s negative impact has been priced into these stocks for a while, in addition to a slowing world economy dragging the whole group down. Sea Cube Container (Ticker: $BOX), Danaos (Ticker: $DAC), Diana Shipping (Ticker: $DSX) and even Dry Ships (Ticker: $DRYS) have been pounded. But some areas are better than others. Take a look at the charts.

Diana Shipping, $DSX

Diana Shipping is the purest Greek shipping play of the bunch and it has been in a downtrend in a descending triangle since November 2009. After seemingly putting in a bottom and poised to break resistance at 11.16 it failed at the 50 day Simple Moving Average (SMA) and printed a long bearish candle Tuesday. The Relative Strength Index (RSI) is meandering near the mid line and the Moving Average Convergence Divergence (MACD) is positive but pretty flat. There is nothing that says ‘Buy Me!’ here.

Danaos, $DAC

Danaos is also a Greek based shipper, but has a diversifying stream of income from leasing some of their fleet internationally. Apparently this is a good thing as it price is recovering form a fall and riding a trend line higher which has been capped at the 100 day SMA. If it can get over 6.00 then it has room to run higher. But it is by no means smooth sailing yet. The volume on the move higher has been decreasing and the RSI cannot seem to break the mid line. Wait for a break over 6.00 to board this stock.

Dry Ships, $DRYS

Dry Ships is also based in Greece but has a diversifying business in its oil rig business. The chart had just broken the resistance at 4.20 last week and looked headed for the 4.50 to 4.60 area prior to Tuesday. It now has a RSI that is approaching the mid line from above, so still bullish to go along with a MACD that is positive and leveling. Tuesday it printed a bearish engulfing candle that stopped at the 50 day SMA. If Tuesday’s low holds and it reverses, meaning the bearish engulfing candle is not confirmed, then it could still try the resistance at 4.5-4.6. A move below 4.08 and this is another one to avoid.

Sea Cube Container Leasing, $BOX

The best of this sorry lot is Sea Cube Container Leasing. It is the only US based company and its business model is leasing containers that are used by ships rails and trucks. Its chart shows an uptrend that has support at the rising 50 day SMA. Tuesday it retested that support and held after a brief move above it, but printed a bearish engulfing candle. The RSI has been trending higher and the MACD is positive, but pulled back slightly Tuesday. If the bearish engulfing candle is confirmed by a move lower look to continued support at the 50 day SMA as a sign to enter, failure there cold trigger a short to support at 16 where the 100 day SMA sits, or 15.50 lower.

So there is not much pretty to sea in the charts of the shipper, but with the best having exposure to rail and truck transport maybe that is where to look. Hmmm, may be a topic for another day. But until then, the sea remains a fierce and fickle mistress.

(As always you can see details of individual charts and more on my StockTwits feed and on chartly.)

If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

blog comments powered by Disqus