DryShips In The Midst Of Another Mini-Runup

DryShips Inc. DRYS is running higher once again. Since Tuesday's close, the stock has been up about 37 percent, with a pre-market rally of another 20 percent on Thursday.

In the aftermath of the U.S. presidential elections, the stock began an astronomical climb from under $5 to $73 over just a few trading sessions, representing a gain of over 1,500 percent.

The dizzying rally was premised on a host of factors, including a demand-supply imbalance, as a series of reverse stock splits this year saw the number of outstanding shares trim its shares to just about 1 million from 672 million. The move to cut down on its number of outstanding shares was motivated by the necessity to comply with the NASDAQ continued listing standards.

Short squeeze was also singled out as a reason for the rally, as short sellers rushed in cover their positions and cut losses when the rally began.

After hitting an intra-day high of $102 on November 15, the stock's rally began to lose steam, as it closed at $11 on November 17, down 85 percent from the previous session. Subsequently, it was a gradual climb back down, with the stock ending Tuesday's session at $4.33.

The stock rose 21 percent on Wednesday, closing at $5.25.

On Thursday morning, DryShips announced a bank update, saying CEO George Economou has become the lender of record under the $85.1 million syndicated loan previously arranged by HSH Nordbank.

The Baltic Dry Index scaled a two-year peak on November 18, signaling a revival in the fortunes of shipping companies. Though tough to imagine it as a fundamental move, given the pesky nature of the global economic recovery in play, investors looking to ride on the volatility could do well to have an eye on the counter.