Fund Flow

Sunday, 10 September 2017

Baltic Dry Index (BDI) Chart Analysis

Baltic Dry index (BDI) is define by Wikipedia as  
"The Baltic Dry Index (BDI) is an economic indicator issued daily by the London-based Baltic Exchange. Not restricted to Baltic Sea countries, the index provides "an assessment" of the price of moving the major raw materials by sea.[1] Taking in 23 shipping routes measured on a time charter basis, the index covers HandysizeSupramaxPanamax, and Capesize dry bulk carriers carrying a range of commodities including coaliron ore and grain." 
Investopedia quote  
"The BDI as an Economic Indicator - A change in the Baltic Dry Index can give investors insight into global supply and demand trends, and is often considered a leading indicator of future economic growth if the index is rising or contraction if the index is falling because the goods shipped are raw, pre-production material, which is typically an area with very low levels of speculation. Because the supply of large carriers tends to remain very tight, with long lead times and high production costs, the index can experience high levels of volatility if global demand increases or drops off suddenly. The Baltic Exchange also operates as a maker of markets in freight derivatives, a type of forward contract known as forward freight agreements (FFAs) traded over the counter." 

It is a barometer of measuring economic activity of the sea freight transporting raw commodities materials and is highly relevant indicator to gauge the health of the global economy.
With Baltic Dry Index rising, commodities trader transporting commodities, shipbuilding, company owning Baltic Exchange related companies could be seen benefiting. 
Base on Technical Analysis (TA),  

There is a big rounding bottom chart pattern drawn in black color line, break out of descending triangle using green color downtrend line linking all the highs and lower high couple with red color classical support neckline, yellow color lines refer to cup and handle chart pattern using green color downtrend line as a guide. 

Baltic Dry Index  
1) All time high in May 2010 is 4078. 
2) All time low in February 2016 is 297. 
3) Fair value 2039 
Immediate Target Resistance is 1500 level (First level), 2000 to 2187 (2nd level resistance range), 2700 to 3132 (3rd level range resistance). 

For price reference, please check it out at Bloomberg 

BDI Chart 11 November 2016 

BDI Chart 13 January 2017

BDI Chart 29 March 2017 

BDI Chart 10 September 2017

BDI Historical Chart since 2009 to 2017 

Disclaimer: All news, information and charts shared is purely by my research and personal views only. This is not a trading recommendation or advice but on the basis of sharing information and educating the investment community. Different traders and investors adopt different trading strategies and risk management approach hence if in doubt please approach or seek clarifications with your Financial Adviser, Broker and Banker.

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