The $BDI - Slow Ahead

In May of 2008 the Baltic Dry Index [ BDI ] rose to a record high of 11793 and then over the next 6.5 months it plummeted to a Low of 663 on December 5, 2008.

The Index has been rising since the Low of 663 set on December 5, 2008. The rise has been contained within an Ascending Channel and the Fibonacci retracement values have essentially been the Resistance and Support levels. Over a year has passed since the rise began and the Index still has not been able to rise to the 50% retracement level of 4914.7. So far the closest it has gotten to that level is 4661 that was reached on November 19, 2009.

For the fourth time this year, the Index has broken above the 23.6% retracement level of 3289.7. Today the Index settlement was 3299. It remains to be seen whether this will be a positive test of the level. If positive, the next overhead resistance would be the ascending trend line that is now at approximately 4570.

A question that could be asked is how much of the recovery of the Index is related to China converting $US into stockpiles of raw material. Based on the slow recovery of The Baltic Dry Index one might assume that the global economy has a ways to go.

However, should the Index continue to rise, the shipping company stocks will be carried higher as a rising BDI translates into greater revenues through higher shipping costs.