Baltic Dry Bulk Indices: Week 5 technical commentary.

February 4, 2018

 There has been much written lately about the re-organising of the Baltic Dry Index make-up. The Handysize input, not considered by the powers-that-be to statistically affect the Baltic as a whole, is to be dropped and the weightings adjusted between the other three classes of bulk carriers. So we'll see how the new, improved and tradeable Baltic Dry Index pans out. Who knows; with enough volume you might see some thoughts on the new index being plastered on this very site. Until then we'll watch developments with great interest, including the new Imabari 38 handysize index.

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HANDYSIZE

 

For Week 5, our thoughts of possible support around the 550 mark for the Handysize Index were heavily tested. The slide, that ran downhill steadily all week, closed at 547. You could say our talk of continued weakness was understated. 

 We could also point to all sorts of gloomy news for the week, like politics or the Dow Jones drop (Yes, the 666 points: no, we're not going to read anything into that.) Even the news from the Baltic Exchange detailed above, plus the general malaise in all the indices, could be headlined.

However, we're trying for technical commentary of course, so let's look at our indicators. Acknowledging our bearish, lagging MACD, let's look at the RSI. At a value of 13.33, it's well into the basement for RSI values and the hope is for a come-back from Week 5.
Our thought was that a lower RSI for Week 5 could indicate some recovery, and this one is very low. Should we see a bounce back, the upside resistance might show up in the 600 - 625 zone. We would need support in the 525 - 550 region for this to happen, and the Handies are in that zone now.

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SUPRAMAX
 

The Supramax Index had a little more staid week than the Handies, although we saw a slight gap down from Week 4 at the open and a slow trickle down to close at 872.
Still below our resistance ideas around 975 - 1000 and above possible support in the 750 - 800 region, we're hopeful of a continuation in this somewhat wide range. 

Week 5's weakness has us eyeing the 800 mark a little closer for any breakthrough, given the downward pressure across all the Baltic indices.

The RSI dropped into the mid-20s, getting us closer to that 20 mark, and hopes for support. The MACD is still above zero and lagging. If further downward travel takes it below zero, we may see the hoped-for support.

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PANAMAX


The Panamax Index retreated from our resistance ideas in the 1500s, and both opened and peaked for the week close by at 1485. Support may still be there in the 1250 region, now that the index ranges in Weeks 4 and 5 have effectively canceled each other out.

 The RSI, slowly dropping, is now in neutral country at 40.44. 
The MACD continued its lagging bearishness after that small blip on Week 4's upsurge.

We're hoping for a more level channel in the Panamaxes, but the overall Baltics' weakness has us wary. A close eye on 1250 for bearish breakthroughs may be worthwhile.

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CAPESIZE

 

The Capesize Index had a similar path to the Panamax index in Week 5, canceling out Week 4's pop-up to close down at 1470. This may see the Capes in a foggy area between our previous "area of attraction" ideas around 1500 - 2000, and possible upside resistance in the 2500 - 2700 zone. 
Adjusted down from our 3000 - 3500 ideas, this upper resistance reflects the depth of plunge in the Cape Index year to date.

It's possible the Week 4 / Week 5 action is the rest we were looking for in our Week 3 comments. Should further downward moves materialise, our next target idea to watch is the 1200 -1250 zone. Our lowest support ideas, you ask? Well, those are in the depths of the Cape downturns in 2015 and 2016, somewhere in the 300 area. Let's not mention that again......unless we're right of course, in which case we'll crow it from the rooftops.

 Our MACD is still firmly bearish and lagging now. The RSI continued edging down towards 30, at 33.61. Our lowest RSI seen in recent times was 17.21 in mid-2017, just before the Cape upturn that lasted for the rest of that year. In contrast, the horrendous lows seen in early 2016 showed neutral RSI in the 40s, suggesting a bullish divergence which indicated the recovery up until late 2016. Yes, we were confused too, but it's the Capes.

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