 | DRYS: Is the channel defined?by yeomps on May 7th, 2008 at 6:21 am |
I have half a mind to sell my (DRYS: 4.35 -18.54%) position here. It has been an amazing run up since I started my position at $63. Don’t get me wrong, I still think that it will be up at 110 come earnings, but here is the chart-munching reason for my concern:
I was originally expecting a breakout from the cup and handle formation, but yesterday it met with some resistance around what was a poorly defined channel. When the channel acted as resistance again today, I tend to think that it may be a sign that the run is over.
The fundamentals keep me bullish on this one, however. Just look at the Baltic Dry Index (a measure of daily spot rates that shippers charge) The last time that the BDI was at these levels, DRYS was in the 100s.
So, if you are in DRYS for the trade, you may want to come up with an exit strategy if you think that the ‘channel’ is going to define the trading pattern. If not, then keep your shares. I’m going to wait for the stock price to let me know what to do (a move above the channel, with a successful test of resistance, or a drop below the previous highs at 88.50)
Side Note: Congratulations Alpha, looking forward to reading your tab.
UPDATE: Out at 94 looking to start getting back in around 90
UPDATE: Yeomps wins again!!!!
Nice post. I’ve stated before on a comment on RC’s blog that I think shipping is looking prime for a breakout. My guess is with the baltic dry index trending higher, and many shipping stocks doing the same thing, and a few of them breaking out, that there will be a sector rally.
May 7th, 2008 at 10:16 amGNK, EXM, GMR, FRO, TBSI, NM, KEX,etc all either setting up for a move, or already breaking out of a trend’s resistance. DRYS could breakout pretty soon here, or it could trade horizontal near resistance before it breaksout. You could be right that it’s trending up and will bounce off support, but I’d rather bet on a move upward from here. With that being said, taking some profits can only be a small mistake at worst.
This is the first time in a while that I feel uncertain about what DRYS is going to do. When it was in the 50s and 60s valuation said that it was sure to go up. Currently, however, it is trading above my price target for current earnings($90), and only 15% away from my target for Q1 earnings included. That being said,I sold AAPL at 160, which was my price target for 2008 earnings, so it could be that my target is conservative. Time will tell.
I’d sell if I had somewhere else to put it. I don’t like PBR at these level, especially since it is having trouble meeting demand currently.
http://www.smartmoney.com/news/ON/index.cfm?story=ON-20080425-000866-1333
Any ideas?
May 7th, 2008 at 12:36 pmNote: BDI is @ 10104 today.
May 7th, 2008 at 12:54 pmhttp://www.dryships.com/index.cfm?get=report
Yeomps …. check out PDE
May 7th, 2008 at 1:39 pm