A Look at Dry Ships DRYS
I previously discussed the Baltic Dry (Shippers) Index, but now I wanted to discuss a potential method from trading your take on dry shipping companies in general, focusing specifically on Dry Ships Inc (DRYS) which enjoyed a meteoric rise through 2007… followed by rapid price destruction throughout 2008. Let’s look at the weekly and daily charts of DRYS.
Dry Ships (DRYS) Weekly:
Price entered 2007 around $20 per share and by October, price peaked above $120, appreciating six times over… but it’s quite unlikely that many investors sold at the top at that time.
Price ended 2007 and entered 2008 in a weak position which most likely turned out to be the first in a yet-to-come three wave Corrective Phase, the second wave (B) of which took price to challenge 2007 highs at $110… but that was all the strength bulls could show.
Price failed to reach a new high and then plunged just as quickly as they rose… and then they fell some more. The weekly EMAs crossed ‘bearishly’ in September 2008 and that was ‘all she wrote’ in terms of bullish hopes.
Notice how the rising 20 week EMA contained price for the majority of 2007 until price broke that level and found tentative support about the rising 50 week EMA.
Has there been a climax sell situation in DRYS? Time will tell – as will the possibly that we may be completing the final “C” corrective wave. Let’s zoom to the daily chart to see the most recent developments more clearly.
Dry Ships (DRYS) Daily:
There’s nothing to say this stock can’t go to zero, so by all means do more analysis than “Gosh, it’s cheap so I have to buy it” but I think you could make a rather compelling bullish argument.
For one thing, a full five wave Elliott impulse down looks to be nearing completing into the terminal fifth wave on multiple positive (swing) momentum divergences.
Notice also that volume is surging mightily to record highs as price stagnates in the sub $5.00 per share level – does that signal capitulation… or aggressive accumulation? Time will tell but around 10 million shares are trading hands daily.
I honestly wouldn’t get bullish until price broke above the rising 20 day EMA, but aggressive speculators could go ahead and enter here, not wanting to miss a possible quick ‘double’ should the market and this stock find key support soon.
Take a moment and look at the Elliott Wave count for this move down – I’ve broken down some of the waves into their corresponding fractals. You may have your own count for this stock as well.
Join the MarketClub for daily analysis, trading signals, technical analysis scans, videos, and education.
Corey Rosenbloom
Afraid to Trade.com
Wow, thanks for the look at BDI and DRYS. I’ve been following both of these for a little while now. I’m a bit of a speculator; looking for a buy-in at or below $3 for DRYS. I agree with your bullish statement; it’s had sporadic jumps before, but I wouldn’t consider it bullish until it goes above $7-8 and the BDI goes up a bit.
~nepharis
short interest has been increasing over that time period….maybe its short sellers piling on to their positions?
news that the shippers might go private
http://www.forbes.com/2008/12/02/dryships-genco-closer-markets-equity-cx_ra_1202markets40.html?partner=yahootix
Is it possible to analyze the tanker segment as you did for DRY Ships? If yes then what is symbol on stock charts? Any other source of data?
You could have choosen Baltic Dry Index($BDI) directly. Why did you choose this index? Just Curious!
You can ignore & Delete my comment, I read this post first and then came the other one!
Apart i still have this question
Is it possible to analyze the tanker segment as you did for DRY Ships? If yes then what is symbol on stock charts? Any other source of data?
Excellent analysis. I was thinking we are due for some sort of bounce from the BDI. DRYS looks to be churng at support.
BTW, how do you get your bollinger bands to appear as a shaded area (vs lines) on your stockcharts? I tried to find that setting but couldn’t.
Nepharis,
Breaking above $8 which would break above the 20 would be the trigger of interest for me – sort of to let the stock ‘prove’ itself a bit before earning a trade.
Even though it’s cheap, a drop from $5.00 to $2.50 would be a 50% capital erosion – doesn’t seem like a lot in dollar terms but in percentage terms, that’s devastating.
Still, I think it’s a good idea to keep our attention on this stock and the BDI just to see if there’s any immediate changes and what those might mean for the broader market.
Batsum,
That’s an interesting thought – thank you for sharing the article link.
The strange thing about volume is that we can clearly recognize spikes, but we can’t as clearly ascertain in which direction traders are pushing price into those spikes – just that a lot of shares are changing hands quickly.
That was a possibility I didn’t consider – shorts piling on en masse. Let’s see what the near future holds!
Man,
One could look at the $SHX – the Marine Shipping Index but I haven’t found a tanker index yet in StockCharts – do you know of a symbol or ETF? If anyone knows of a symbol, let us know here.
I analyzed the $BDI in the previous post and wanted to show DRYS as a vehicle to trade that bias – a stock that closely reflected it. A reader had requested I do an Elliott Count on the Baltic Dry Index which is what got the post started.
Will,
Churning is a good word for DRYS. Forming a possible bottom, etc. It doesn’t look bullish yet but it certainly looks to be losing its bearish fangs and claws.
Ahh, the Bollinger Band trick. I didn’t like the lines and discovered you can display the Bollingers as an “Area” setting and then I decrease the intensity to 0.5 (50%) to give the shaded effect. This is done with the settings pane to the right of the Bollinger Band settings (where you adjust the values). You can also adjust color.
Loved to read your blog. I would like to suggest you that traffic show most people read blogs on Mondays. So it should encourage bloggers to write new write ups over the weekend primarily.
regards
charcoal grill