[caption id="attachment_926" align="aligncenter" width="500" caption="DryShips Inc."][/caption]
[caption id="attachment_930" align="aligncenter" width="500" caption="DryShips Inc."][/caption]
[caption id="attachment_928" align="aligncenter" width="500" caption="Commodity Index Fund"][/caption]
[caption id="attachment_932" align="aligncenter" width="500" caption="Claymore/Delta Global Shipping index"][/caption]
Figure 1: Reflection from middle of downtrend from 09/23 and breakout of short term downtrend from 11/05.
Figure 2: Good volume testing \$5.40 (long term resistance from Figure 1), volume more than previous \$5.40 level from 11/19. Stochastic and CO early positive turnup on the daily.
Figure 3: Daily DBC (Commodity Index) showing positive divergence on stochastic. MACD neutral but slightly positive. Weekly DBC positive divergence on all thee, Stochastic, MACD, and CO.
Figure 4: SEA (Global Shipping Index) moving up.
Resistance: minor one at \$9, then primary from \$12 to \$25. Once it hacks through those, it's clear sailing up.
\$2.9 billion of debt! Market cap is only \$250M! 1.356 debt/equity ratio. However, that's in-line with other shipping company, and much less than the bigger players such as FRO (over 5.0 debt/equity).
Figure 1: DRYS still within multi-week downtrend channel. We could test \$9 and bounce back.
Figure 2: Daily chart positive signals not confirmed yet.
Figure 3: Short term could still see some chopping down on commodity prices.
Figure 4: Lots of resistance up ahead for SEA.
Support: \$4 and then all time low of \$3.
Good risk/reward ratio and studies show positive divergence. I hope to ride this up for at least the intermediate, if not the long, term.
On another note, I wanted to purchase the options strangle to hedge this trade, but the premium were so high today that I opted for the cheap shares instead.
: http://traderpau.files.wordpress.com/2008/11/2008-11-26-drys.png : http://traderpau.files.wordpress.com/2008/11/2008-11-26-drys_ta1.png : http://traderpau.files.wordpress.com/2008/11/2008-11-26-dbc.png : http://traderpau.files.wordpress.com/2008/11/2008-11-26-sea.png