Change in trend - strong case for bulls (S&P500 weekly chart)

The obvious fact is that we are seeing the S&P500 index holding its long term support of 1139pts successfully 3 weeks back on the weekly chart

Moving down to the daily chart, we are seeing a change in character, or rather change in trend when the S&P500 broke out of its trading range, signaling that the Aug/Sep bottom would hold.

Adding to the strong case for the bulls, the Baltic Dry Index widely considered as the purest form of economic indicator, is already on the move, breaking out of its trading range back in Aug/Sep.

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.

BAC - Big Move Coming Soon

Dear Readers, we'll have a huge move coming soon for BAC as it is forming a symmetrical triangle overthe past 2 moinths. Question is: is it going to be up or down? The bulls have a strong case as the MACD is currently displaying a positive divergence. BAC has strong support at the $6 level and if this $6 mark is breached then all hell will break loose. Nonetheless, its still best to wait for the breakout to occur before initiating either a long or short position.

BAC

This downturn should serve as a good buying opportunity as the Baltic Dry Index is telling us a different story as it had already move higher out of its trading range. This spells good news for the economy. I have a post on the Baltic Dry Index here. For all we know, the August low could be the lows for this year!

Baltic Dry Index breaking out

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.

Strangely, in these recent weeks, the Baltic Dry Index is breaking out. There can only be one reason; obviously there is a pickup in shipping of materials and thus more demand for such shipping activity. Is this not good news for the economy? Who knows? We could even be seeing the change in trend here as the battered economy picks itself up.

Despite all the gloom and doom, the index is churning another different storyline.

Baltic Dry Index - Glimmer of Hope

Lo and behold, amid these turbulence times, where news are at their gloomiest, the Baltic Dry Index, widely known as the purest form of forward looking indicator is silently picking up and moving above their 200day MA. What does this mean for the stock markets?  =)

 

Market thoughts - 7 Aug 2011

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.