Ships Ahoy!

Shipping has been on my radar for a couple of months now and is on the move and gaining momentum. I have a rudimentary frame work to place shipping into context: Shipping is macro/cyclical in nature, and shipping is very subject to the laws of supply and demand as well as a boom/bust business model. When economies turn sour shipping begins to suffer as vessels are docked due to lack of demand. In turn shipping rates will lower, profits lower, and growth stalls. When economies turn around, demand on shipping increases along with rates as there aren't enough vessels to haul. In turn shippers go through a boom cycle and will use profits to increase their fleet to meet up with demand and replace decommissioned vessels. It takes time to complete a build and often by the time the new ships are ready to be christened economies are on a downturn which means there are more ships docked as the cycle repeats.

With shipping currently in demand this may be a tell on the larger picture economic out look of macro players who are positioning themselves on the cheap and perceive the sector as a value play. I keep in mind the maxim I've heard that money in the market flows to where it's most wanted and over the past few months there has been an inflow into shipping. I noted shipping back in January when there was a cluster of them giving off a clue that I watch attentively, year high volume.

YHV Cluster in Shipping

As can be seen from my watch list and tracking dates, the returns after this signal have been 221%, 71%, 42%, 26%, and -66%. This week there were three more shippers that have been placed into my March year high volume watch list which signals to me that this is a sector related move and potential new leadership group moving forward.

DSX

EGLE

FREE

GASS

GSL

NEWL

PRGN