Dear Readers, its like deja vu all over again just like back in the 2008 financial crisis. The S&P500 lost almost 7% last week. Utmost on everybody's mind now is that whether the markets will rebound from its current oversold situation. Almost every traders are expecting a bounce of sorts for the coming trading week. And just before the close of trading on Friday, rating agency S&P downgraded the credit rating of the US government. Question is: Is this downgrade already been baked into the current beaten stock prices? I, for one, think we'll see the market holding the low of the long hammer reversal candlestick formed on the Friday.
Not the time to be long but one should sell the short term bounce into resistance if / when the bounce comes. You can bet that investors who were not able to get out when the market plunged last week will dumped their shares on any spike in share prices when shorts cover and longs who sense bargain buys. There are signs that the hammer close on Friday on high volume might be a a sign of capitulation where investors dumped their last stocks holdings and no more sellers are to be found. We'll see. At this point in time though, cash is king in this environment.
On a separate note, I have come to know that the Baltic Dry Index (BDI) has been on a spiral downward trend and had not recovered since the financial crash back in 2008. The Baltic Dry Index provides an assessment of the price of moving the major raw materials by sea and is known to be one of the purest form of economic indicator in the sense that only member companies who have actual cargo/ships are allowed to trade in this index with no speculative players involved at all.
This brings us to this particular company Dryships Inc (DRYS), an operator of drybulk carriers who pegged its rates to the BDI. In other words, buying into DRYS is the exact of buying into the BDI. No rates go down forever. This would be a pure contrarian play and dead money while waiting for the index to recover. This might be a multi-bagger when the economy recovers. For all the contrarians out there, i present DRYS. See chart.
Not the time to be long but one should sell the short term bounce into resistance if / when the bounce comes. You can bet that investors who were not able to get out when the market plunged last week will dumped their shares on any spike in share prices when shorts cover and longs who sense bargain buys. There are signs that the hammer close on Friday on high volume might be a a sign of capitulation where investors dumped their last stocks holdings and no more sellers are to be found. We'll see. At this point in time though, cash is king in this environment.
On a separate note, I have come to know that the Baltic Dry Index (BDI) has been on a spiral downward trend and had not recovered since the financial crash back in 2008. The Baltic Dry Index provides an assessment of the price of moving the major raw materials by sea and is known to be one of the purest form of economic indicator in the sense that only member companies who have actual cargo/ships are allowed to trade in this index with no speculative players involved at all.
This brings us to this particular company Dryships Inc (DRYS), an operator of drybulk carriers who pegged its rates to the BDI. In other words, buying into DRYS is the exact of buying into the BDI. No rates go down forever. This would be a pure contrarian play and dead money while waiting for the index to recover. This might be a multi-bagger when the economy recovers. For all the contrarians out there, i present DRYS. See chart.
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