The stock market is littered with stocks that went to the moon and back. Canadians will remember JDSU and Nortel. Americans will remember Yahoo and Microsoft. The stock below was a darling into the 2006 runup. It has since had a small pullback of 99%. ;-( So why should we be interested now?
The company name is DryShips. Here is the Yahoo Finance corporate Profile.
DryShips Inc. owns drybulk carriers and tankers that operate worldwide. The company, through its majority owned subsidiary, Ocean Rig, owns and operates 10 offshore ultra deepwater drilling units comprising 2 ultra deepwater semisubmersible drilling rigs and 8 ultra deepwater drillships, three of which are scheduled to be delivered to the company during 2013 and one of which is scheduled to be delivered during 2015. DryShips Inc. owns a fleet of 42 drybulk carriers comprising 12 Capesize, 28 Panamax, and 2 Supramax with a combined deadweight tonnage of approximately 4.4 million tons; and 10 tankers comprising 4 Suezmax and 6 Aframax with a combined deadweight tonnage of approximately 1.3 million tons. The company was founded in 2004 and is based in Athens, Greece.
So in the commodity shipping boom of 2006 this stock was a rising star.
What makes this so interesting for me is the similarity of this stock to the commodity cycle, expecially in the last 2 years. It is also very similar to the $SSEC - The Shanghai Composite. So a couple of interesting things are going on. The DRYS chart has broken the downtrend. The Commodities trendline has also broken the downtrend. The Shanghai is testing the downtrend. As a footnote, DRYS did not confirm the commodities bounce from 2009 to 2011. It just tracked sideways. Maybe that was the best clue that all was not well in the commodities world.
I will say that this is the most bullish DRYS has been in a while. It has only crossed above the 40 WMA and held for multiple weeks a few times. I marked those in blue. Currently, it has not only jumped above, it has done it with more aggression than we have seen. It is nice to see the commodities confirm the move. Now we would expect the Shanghai to do the same thing. That is what I will watch for!
Good trading,
Greg Schnell, CMT
