Ship owners are always looking for indicators, both from the market but also technical, in order to evaluate and determine the future strategy in the market, whether it’s chartering or buying and selling their vessels.
In its latest weekly report, shipbroker Allied Shipbroking said that “in an attempt to clarify the prevailing momentum and trend shifts in the dry bulk market for both asset price levels and freight rates since the onset of the previous year, we have once again turned to utilizing a technical analysis approach. As noted in the graph below, we have used the TRIX (triple exponential average) metric for the freight TCA figures, alongside the RSI (Relative Strength Index) for asset price levels of a 5- year-old units, with both indicators being derived (and equally weighted) from all main size segments (Capesize, Panamax, Supramax, Handysize)”.
“As a quick and small introduction, the TRIX shows the rate of change in a 15-period moving average that has been smoothed exponentially 3 times (with signals given when the line crosses zero), while the RSI measures the velocity and magnitude of price movements (with theoretical “overbought” and “oversold” levels being marked at 70 and 30, respectively)”, Allied said.
Source: Allied Shipbroking
According to Allied’s, Thomas Chasapis, Quantitative Analyst said that “it is beyond the scope of this market view to go into depth as to how good signaling these indicators provide individually in terms of market direction, but rather to show whether the movement of one can potentially give an early incline as to the direction of the other and, at the same time how well both used in tandem can give a clearer view of the market’s overall trajectory. It seems that the TRIX indicator has given several “correct” early signals for the RSI. Looking at the graph, most of the zero-line crossovers of the TRIX were noted within a time frame just prior to the RSI following this same trend”.
He added that “at this point though, I would focus on the shifts noted during the summer period, which at that time, adequately reflected the current prevailing sentiment amongst market participants. The TRIX gave a bearish sign roughly at the midpoint of the summer period, while for the parties more focused on the SnP market, there was a time lag of around 3-weeks before the RSI line crosses the overbought line marker (in green color), indicating that an exit strategy from an asset would an optimal choice at that point. The explanatory “power” of the combination of these two technical oscillators proves to be robust within this market regime. The above analysis is not exhaustive as to how bearish the overall dry bulk market tone is at this point. It is a mere approach using a different angle to analyze one view of the market’s state and risk, showcasing potential hedging opportunities and strategies, while “smoothing out” the excessive noise and contrasting signals that tend to appear in such a volatile market”, Mr. Chasapis concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide
