In Dry Bulk Market,International Shipping News 14/11/2016
Last week we noted the low to low cycle on the Capesize index was suggesting that another upward move was due, and this was reinforced by the hammer candlestick pattern we were seeing on the weekly chart which was illustrating support in the market. This was followed by a 58% upward move in the Capesize index to US$ 16,179. Weekly momentum indicators remain bullish at this point and that would indicate that from a longer term perspective there should be more room to the upside. Technical resistance on the weekly chart can be found at US$ 18,167 and US$ 20,155 with support at US$ 14,191 and US$ 12,203. Daily momentum is now overbought, however until we see a bearish cross and a pullback below the 75 level this is illustrating the strength of the trend rather than flagging as a sell signal. Fibonacci support can be found at US$ 12,621 and US$ 11,539 and based off the weekly momentum indicators should find willing buyers around these levels. Resistance from a daily perspective is found at US$ 17,915 and US$ 19,777.
Note the weekly resistance varies from the daily as these are pivot point values rather than Fibonacci and are very powerful when they are close to each other. Dec futures have seen a 21% upward move in the last week to US 12,305. A straight line upward move on a market with 6 months of data is always going to be difficult to pick technical levels. Rather than use Fibonacci extensions which are in based of a 3 period move in October we are using simple a simple Gann technique of fractions for the resistance levels and Fibonacci retracement for the support. Technical support can be found at US$ 11,467 and US$ 10,683; any rejection of these levels would suggest that we could once again test the highs achieved today at US 14,000. Resistance can be found at US$ 14,630 as this is a 100% of the move from the recent low of US$ 7,315. If this is broken you should find secondary resistance at US$ 15,550. Any rejection of these levels would suggest that technical support should be tested.
Cal 17 futures continue to perform since we sent the buy recommendation out 2 weeks ago and this week’s close would suggest there is potential for more upside in the short term. However we note that the highs that are being achieved on the futures are not being matched on the stochastic. This is known as a bearish divergence and is a warning (not a sell signal) that we could see a market pull back soon. Technical resistance in the Cal 17 futures can be found at US$ 9,265 as this is the 38.2% Fibonacci retracement of the July 15 Mar 16 sell off. There is further resistance at US$ 10,050 as this is the 50% Fibonacci level. A rejection and lower closing of either of these levels would suggest we are enter a corrective phase. Technical support can be found at US$ at US$ 8,150 and US$ 7,950 and these will be the obvious targets on any market pull back.
The Panamax Index continues in an upward trajectory as it remains above all of its moving averages as we look to test the upward trend channel. Technical resistance can be found at US$ 8,500 the upper trend channel, with secondary resistance at US$ 9,250. Based off recent trend movement the upper channel should hold in the short term; however it is important to note the weekly chart is now above the 200 period MA and has failed to hold above this line for any period of time since 2008. What could be significant is this acted as a market support on the most recent market pull back. If the upper channel holds and the market pulls back look to the shorter period stochastic for signs of market strength specifically a bullish divergence on a short term pull back as this would signal the upper channel could soon be broken. Caution on any close below the US$ 7014 level as this is the 200 period MA as this would signal the trend is weakening.
We noted last week that the Dec futures had the potential to move higher (see website if you didn’t receive) and this has been the case. Momentum is now overbought and technical resistance can be found at US$ 7,891 (already broken) and US$ 8,675. The trend remains bullish, so avoid trying to pick the top here, however if the resistance level is rejected then look for a potential pull back to US$ 7,600 with secondary support at US$ 7,365. A close above the US$ 8,675 would suggest the secondary resistance at US$ 9,475 could be tested.
Last week we anticipated that the Q1 futures would look to close the disparity between itself and the index and this has been the case. Technical resistance can now be found at US$ 6,100 and US$ 6,250 and these level. The first of these is the 1.618% Fibonacci extension of the March – June rally, if broken expect US$ 6,500 to be tested in the near term. Any rejection of the resistance levels mentioned should find support at US$ 5,650 and US$ 5,500, a close below the secondary support does not signal the end of a bull move but it would start asking serious questions.
Very little has changed in the Supramax index, momentum has gone from overbought to over sold as expected on a small pull back and we remain in a bullish trend. Technical support at US$ 7200 (if reached) with resistance still at US$ 7,555. Cal 17 futures have been on the move and are now trading up at US$ 6,650 value with technical resistance at US$ 6,700 and US$6,750.
Daily momentum is overbought so these levels should be respected; however weekly momentum is above 75 and signalling a trending environment so a rejection of these levels are need before entering into the market here. Point of note, we have had 3 upward waves, and this normally is all we see before a corrective wave begins.
Technical support can be found at US$ 6,475 and US$ 6,400, a close below the latter would suggest we are entering a corrective phase.
Source: Freight Investor Services (FIS)
