Baltic Dry Index - A Review

I believe that the Index is getting close to a reversal point. A natural one would be at the 0.382 Fibonacci value of 4914.66.

The settlement on 191109 was 4661 with a rise of 18 points. However the Baltic Capesize Index [BCI] dropped 187 points to 8056. On the 20th the BCI continued its downward reversal with a settlement at 7542 on a drop of 514 points. As expected the BDI, heavily weighted by the BCI, turned down shedding 154 points for a settlement of 4507. Once this correction is completed there will be a leg 5 that will rise towards the 50% retracement level.

As I see the Weekly chart:

11793 - 663 EW A

663 - 4291 EW B(A) 3628 points

4291 - 2163 EW B(B)

2163 - ? EW B(C) Believe that 3 is completed and started on 4 of 5 . If A=C then target 5791 - reasonable and still short of 50% retracement from the HIGH of 11793.

For a dose of reality consider that one year ago a Capesize vessel could be chartered at a daily rate of $USD 3691 . Today it is $USD 81575 but way below High of $USD 233,000 that was set in 2008.

Thoughts From The Other Side

They say this is an Index that can not be manipulated. I think it could be . All you need is a country with a surplus of $US . On a low you have "traders" invest heavily in shipping companies. You could also do the same with resource companies but the reward might be much greater with the dry bulk shipping companies. Then you issue a directive " build up those stockpiles of iron ore and coal" . Capesize vessels will be in great demand resulting in an increasing daily rate which sends up the BCI and also the BDI. This also results in additional cash flow for shipping companies and UP go the share prices. So they change gringo money for real assets and when ready they can reverse the process by reducing imports and shorting the shipping companies.