Tuesday, July 8, 2014

BDI Baltic Dry Index Weekly Chart Falling Wedge Oversold Positive Divergence

The drop in the Baltic is dramatic collapsing from above 2300 to 800 this year; -65%. Shipping rates continue to drop due to over capacity. Many shipping companies are bringing new ships on line so competition increases resulting in lower rates. There are even more ships coming on line going forward. However, if the global economy is doing as well as the ivory tower economists say it is, the Baltic should be far higher. The softness in the BDI verifies the slowdown in China.

The Baltic should base and recover moving forward. The dark green lines show positive divergence in place and along with the oversold conditions and falling wedge pattern, will bounce price higher. The 200-week MA sloping downwards is a very disturbing and ominous longer-term dire market signal. The 50-week MA is now rolling over as well. If extended softness is projected in the BDI over the next year or two, perhaps a move through 700-1300 for many months, global recession is likely. The sick Baltic activity would eventually verify that the world's economy is ill.

The ADX was at 30-40 during the back end of 2013 verifying a strong upward trend, however, things fell apart. Note that the wicked downtrend this year is with a benign ADX down at 22 so the down move in BDI is not a strong downward trend. This hints that price will base and likely stagger sideways for months to come. 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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