Tuesday, 25 November 2014

DRYS - the terribly troubled shipper

Whilst the broader equity market has more than tripled since 2009, Dry Ships (DRYS) - along with the rest of the shipping companies, have remained weak. Today, DRYS settled -3.3% @ $1.45. The broader outlook remains 'subdued' whilst the BDI remains so very low.

DRYS, daily

DRYS, weekly

DRYS, monthly


*DRYS remains an old favourite of mine to keep an eye on, not least having watched it implode from over $100 in summer 2008.. to the lowly $1s.

First, see key stats.. @ yahoo finance

A key problem for DRYS is the near $6bn of debt. With market cap of just over 0.6bn.. that makes for a debt to market cap' of 1000%.... truly lousy.

The BDI - flat lining since 2011.

BDI, monthly

The BDI (Baltic Dry Index) really explains why most shippers are still suffering. Freight rates are still stuck at very low levels. Whether you want to attribute that to over supply, efficiency gains (larger ships), or just a weak global economy, doesn't really matter.

What does matter is that with the BDI still in the 1000s... most shipping companies are struggling just to stay (no pun intended) financially afloat.

Will DRYS survive?

Considering we're in an economic growth phase, DRYS is performing badly. What happens when the next recession hits?

My guess? Maybe some kind of reverse merger with another of the shippers, NAT or DSX. The problem remains the debt, and even if DRYS can turn profitable in 2015, it'll remain in persistent trouble because of the interest payments ($332 million in 2013).

I sincerely hope DRYS won't disappear next year, it'd be the end of an era.

*a reverse split in DRYS stock seems very likely next year, not least if the price falls under $1.

*I hold no position in DRYS, and have no intention, unless I see some real inflation start to appear in the economy.. along with the BDI >2500.

Monday, 24 November 2014

RIG, SDRL - drillers remain broadly weak

Despite the main market remaining strong, there remains broad weakness in energy stocks. The oil/gas drillers of Transocean (RIG) and Sea Drill (SDRL) settled lower by -1.3% and -2.9% respectively. Mid term outlook is bearish into spring 2015.

RIG, daily

SDRL, daily


Suffice to say, considering the broader equity market, the energy sector remains very weak.... but then... Oil itself continues a multi-month down wave.

If Oil $66/60 in early 2015, then the oil/gas drillers will continue to decline.

Most bearish downside targets...

RIG, 20/17
SDRL 12/10.. although the latter would likely require some degree of major downward revision for 2015 profits.

I am long term bullish on both companies, but until Oil levels out, there seems no point in getting involved on the long side.

Friday, 21 November 2014

TVIX, UVXY - VIX instruments in decay mode

With the broader equity market breaking new highs, the VIX remains subdued. The 2x bullish lev' instruments of TVIX and UVXY are merely decaying, seeing net weekly declines of -4.4% and -5.6% respectively. Outlook into early 2015... further declines.

TVIX, daily

UVXY, daily


*first, an update on the VIX, weekly

There is the threat of a brief spike to 18/20 before year end, but with continued action from the central banks (not least China and the ECB today)... the risk of an upside VIX spike remains low.

As for the VIX instruments of TVIX and UVXY, both are simply back to the usual price action of the last few years.. on a slow.. but gradual decline.. due to the usual 'statistical decay'.

Considering the broader equity market, I have ZERO intention to be long VIX in any manner for some months.. and indeed, the last VIX position I took was summer 2013.

*with TVIX set to lose the $2s.. another reverse split looks due within the next month or two

Thursday, 20 November 2014

INTC - back to September 2000

With moderate price chop in the broader market, Intel (INTC) was a standout, settling higher by a very significant 4.6% @ $35.94. This is the highest daily close since Sept'2000. Outlook is bullish, with a very valid upside target of the $50s by summer 2015.

INTC, daily

INTC, 20yr, monthly


*it is notable that whilst the core of the tech market blew up in March'2000, some stocks still managed new highs later that year, with INTC being one of them.

Intel remains one of my top tech stocks, and I certainly have more respect for it than AAPL or the GOOG.

The $50s in the current multi-year rally... really?

Considering the broader trend, I've now little doubt INTC will just keep on battling higher for another 6-9mths.. perhaps even a year or two beyond that. With a superb product line, INTC has a secure long term future.

Wednesday, 19 November 2014

ANR, BTU - coal miners still broadly weak

The coal miners remain one of the most unloved sectors in the US equity market. With some moderate weakness in the broader market, Alpha Natural Resources (ANR) and Peabody Energy (BTU) settled lower by -9.7% and -4.2% respectively.

ANR, daily

BTU, daily


Little to add.

The coal miners have seen a moderate rally since the main market floored in mid October, but today's daily decline bodes badly for the rest of the week... month.. and probably into year end.

BTU looks fine across the longer term, but ANR remains 'suspect'.. along with ACI and WLT.