From Speculative Start to Crushing Collapse in DRYS

Nov 17, 2016: 2:32 PM CST

Well that was exciting while it lasted – and it didn’t last long.

Shares in Dry Ships (DRYS) – a highly speculative stock – crashed to the ground today.

While the trading community has been abuzz with Dry Ships (DRYS), I posted twice about the rally on the way up (with retracements) and now let’s close the chapter on Dry Ships with today’s “Collapse” post.

It’s generally safe to trade pullbacks (retracements) in a rising trend with progressively higher volume (green arrows) and it’s far less safe to do so when volume dries up.

Look closely at the message from volume as this stock reached a fever pitch in its ‘impossible’ journey from $5.00 to $100.00 in a week.

The negative volume divergence at the high – combined with the key Round Number Reversal at $100 – proved too much for buyers of DRYS.

Instead, buyers took profits rapidly on November 15th as price collapsed 30% lower in half a session.

A freeze took place November 16th and now we see the return to earth back toward the price where this impossible rally started.

This is a speculative play, not a professional investment play but it doesn’t mean you can’t try your luck at rapidly-rising prices.

Just know that it often becomes a fool’s game of who’s holding the bag last – or a brutal game of financial musical chairs.

Nevertheless, study the birth, progression, and final end (on divergences into resistance) for this high-flying and now faster-crashing name.

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Corey Rosenbloom, CMT

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