Friday, May 2, 2014

BDI Baltic Dry Index Weekly Chart Sideways Channel

If the global economy is so robust as analysts say, why is the Baltic Dry Index in the crapper? The Baltic provides insight into shipping bulk materials such as coal, coke, iron ore, grains, recyclables, powders and many other products. Obviously a robust Baltic Index shows that global manufacturing activity is very strong and the world economy is growing and expanding. Last year experienced the latest central banker push higher due to the easy money. The Baltic broke up and out of the sideways triangle easily achieving the 1700-ish target and higher.

At the end of last year, Keystone highlighted the top due to the negative divergence and overbot conditions. The smack down occurs to begin the year and the Baltic has been in the doldrums ever since. Price is falling through the downward-sloping channel. The green lines show positive divergence and oversold stochastics creating this current bounce. The MACD line remains weak and bleak, however, and the RSI never reached oversold territory, so a weak sideways funk would  be expected through summer time through the 850-1200 range.

A weak Baltic clearly verifies the slowdown in China which will negatively impact the commodity currencies and countries such as Australia and Canada. Note the weak downward-sloping 200-week MA which indicates a sick environment. There is no verification of a long term global recovery until the 200-week MA flattens and heads higher which may take several months even another year or two. The behavior above is disinflationary and deflationary. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

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