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The Baltic Dry Index Is Headed for New Post-Crisis Lows

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A bit ago Barry Ritholtz directed our attention to a Bloomberg story on the Baltic Dry Index.

The Big Picture:

We haven’t looked at Baltic Dry Index in a while –

Despite the high CRB Index, the BDI has not managed to rally much off its post crisis lows. The reason for this: Massive over-building of new bulk transport ships.

If you go to his post you'll see Barry presented both the arithmetic and log charts of the Baltic Dry Index. But here is a view of the index with DeMark indicators overlaid.

You can see TD Sequential 13 buy and sell signals have been remarkably accurate with this index on a MONTHLY basis over the past 10 years, correctly identifying two extreme peaks, one in 2004 and the most recent in 2008. Unfortunately, a new momentum phase down has begun, illustrated by the current count. The solid red line broken in 2009 is a TDST Down break, which identifies down trends in place. Unlike the 2004 peak when the Baltic Dry Index never even touched it's then active TDST Down level (dashed red line) this time the trend is decidedly negative. Does not bode well for shipping.
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