Tuesday, July 14, 2009

Bookkeeping: Selling Most of Excel Maritime (EXM) Into 16% Spike

Excel Maritime (EXM) has been performing very poorly, but today there is a 16% spike so I am going to sell the majority (95%) of a smallish (0.7%) stake into this euphoria. I am exiting around $7.10. Part of this move is 'reflation' is the computers choice today and part of it is according to TheStreet.com capesize ships showed the first pickup in pricing after 13 days straight down. I guess the Chinese want to buy some iron ore today.
  • Shares in the heavily traded dry bulk shipping sector were a bit stronger Tuesday, apparently bolstered by a spike in shipping rates after two weeks of steady declines.
  • Dry bulk, the raw-materials freighters of the global economy, often see their stocks respond, like an ultra-sensitive seismograph, to the minute movements of things like commodities prices -- anything, in fact, that might indicate an uptick in worldwide trade. The industry is especially dependent on Chinese steelmakers' use of Australian and Brazilian iron ore, which the bulkers haul across the oceans.
  • According to the London-based Baltic Exchange, spot-market rates for the huge Capesize-class ships (the ones too big for the world's canals) popped nearly 6% Tuesday to $53,600 per day. That follows 13 straight days of declines. Helping the move upward: four Capesize vessels were booked Tuesday morning to haul ore from Brazil to steel foundries in China and Europe.
Again, this shows you how simplistic and "knee jerkish" things are in the market - Baltic Dry Index jumps one day - all the dry bulk shippers rejoice together. The article above used a great word - seismograph - to describe how the program traders are so sensitive to any tick in news in this group.

I learned long ago with the dry bulk shippers not to be too worried about the charts - they have a mind of their own. If the Chinese buy some more iron tomorrow these stocks can spike again; if not, then they can drop 10%. So the chart is only for entertainment purposes.

I will look to rebuy lower if and when; I won't short because charts are not respected in this group... more important is to know China's plan for chartering ships tomorrow.

Long Excel Maritime Carries in fund; no personal position

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