BDI Baltic Dry Index Weekly Chart Epic Collapse H&S Channel Positive Divergence

The Baltic Dry Index (BDI) has dropped for 32 straight sessions, now at the 2008 lows. The European recession and slowing growth in China and Asia, as well as a glut of ships, and also natural disasters to some extent, are all contribuiting to the epic downfall. Shippers pray each day for quantitative easing actions so the shipping industry will recover.

Technically, the lower rail of the blue channel targets 300-600 as the bounce point. The teal lines show the positive divergence in place now that the lows have matched the 2008 lows. Thus, there is a light at the end of the tunnel. The red H&S pattern targets these price projections as well. The 20 week MA under the 50-week MA is a sign of weakness and although the 20 is above currently, the trajectory shows that the negative vibe will occur again. The 200-week MA is sloping negatively and that is very bearish, verifying the long-term sickness in place. The 200-week MA will likely not be able to slope positively for at least a couple of quarters (six months time).

After the positive divergence bounce occurs from 300-600, price will want to come back down again, with the BDI remaining in a sideways funk for many months ahead. This chart does not forecast a healthy world economy since the ships transport the building blocks of all strong global economies such as rubber, cement, grains, coal, iron ore, steel, etc... Thus, if the ship's are docked with the Captain laying on the beach on a lawn chair each day, with nothing to do, the joyousness in equities markets is cause for concern.