Dry Bulk Shipping update

Over a year ago we posted the following report suggesting the cyclical downturn in the Shipping industry was ending: https://caldaro.wordpress.com/2012/09/27/dry-bulk-shipping-industry/. It bottomed right around the time of the report.


Since that September 2012 low at BDI 661 shipping rates have more than tripled to Friday’s high of BDI 2176. Not only have rates tripled in value, but the progression was a bullish five wave pattern. In the previous report we had identified a 13 year cycle: nine years generally rising and four years generally declining. The nine year rising part of the cycle was also divided into a five year rise, a one year decline, then another three year rise. Since shipping rates hit a cyclical low in 2012, they should continue to generally rise for the next four years. The very clean five wave pattern and the five year rising part of the cycle are quite bullish for this industry.


One would think after a five wave pattern completed a significant correction should follow. And this is the reason for this report. Not only do we think this correction will not occur, but that the five wave pattern is likely to extend higher.

BDI 2005-2008

Recently we reviewed the last nine year rising phase of the cycle. Specifically the rise from 2005-2008. It was also a five wave pattern, but the waves gradually subdivided into an extended advance. What caught our attention was the RSI oversold conditions during Major waves 2 and 4. Clearly they were the two major lows during that advance. Reviewing the currently weekly chart, from 2012, one will notice a good oversold condition during Major wave 2. But nothing similar has occurred for what would be considered a Major wave 4. As a result, we do expect the BDI to continue on with its bull market. Until the last uptrend follows another good oversold condition. Under this scenario it is possible to see rates double yet again before this bullish phase ends. You can follow the BDI along with us using this link: http://stockcharts.com/public/1269446/tenpp/9.

About tony caldaro

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19 Responses to Dry Bulk Shipping update

  1. CB says:

    Thanks for this interesting update, Tony. Have a great week everyone!

  2. nyjsec314 says:

    Great observation. Had happened to take a look at the index on Thursday. Looked at DRYS today- wow for the drop, and wow for the recent pop.

  3. scorp100 says:

    Namaste Tony. Do you like DSX more because its balance sheet is better than others or are there other reasons as well? NMM has been more consistent performer and has very good dividend. I understand that you don’t recommend any stocks or offer any trading advice.

  4. hkloon says:

    Hi, is BDI an index that’s tradeable? Or there are ETF follows BDI?

  5. fishonhook says:

    Tony how does this very bullish call on BDI tally with the market call of a third wave near the end. Won’t a significant market correction impact BDI too? And you have written more than once that we are in the last legs of this bull market. Well a doubling of BDI would imply robust worldwide growth. These two would seem to be a contradiction. Not saying they cannot both happen, but interested on your views.

    • tony caldaro says:

      If you review the long term BDI chart you will notice cyclical bottoms occur approaching stock market tops:
      1986 (1987 crash) and 1999 (dotcom bubble). So no economic boom.

      • fishonhook says:

        You are right. It seems to have had a trough a year before the market peak and then corrected with the market.

  6. ewmarkets says:

    Thanks, Tony. Do you think the recovery of this industry foretells rigorous economic recovery at least in the US?

    • tony caldaro says:

      If you review the long term BDI chart you will notice cyclical bottoms occur approaching stock market tops:
      1986 (1987 crash) and 1999 (dotcom bubble). So no economic boom.

  7. torehund says:

    Thanks Tony !
    Its a little disbelief, is this for real kind of thinking..so there may be legs to the BDI rise.

  8. bobhopium says:

    Thanks Tony.

  9. Thanks Tony. This analysis helps me in my trading decision on DRYS. It is basing for the past 18 months. Looks like ready to run higher. Once it takes out $4, I am going to be in this trade.

    • davidshort96712013 says:

      Thanks Tony. I also hold a boat load of DRYS. I am very new to EW but understand we are now in a major 5 to end primary1 on the BDI. The charts for BDI , DRYS and DSX all look the same to me ? I want to hold DRYS long term but was thinking to try and catch the end of P1 some place north of $4 and sell with the idea to buy it all back at the end of P2 . Now after reading this report and comments, are we suggesting the BDI has just started a five year rise and pull backs could be muted ? My trade idea may be way to cute for my own good ? Any other opinions on trading DSX and DRYS ?

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