Category Archives: Condition Watch

13th December 2013 – The Baltic Dry Index surges back to life

Since the early summer, I’ve been following the Baltic Dry Index (BDI) closely. Tracking twenty three of the world’s busiest shipping routes, the BDI is one of the purest indicators of genuine economic activity out there. It has acted as a superb leading indicator for the general mining sector over the years and I’ve been watching for any sign of a turnaround, as a precursor for getting back into these battered stocks. My original target was for the BDI to regain and hold 1,500, the minimum level I associate with genuine global growth.

 

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26th November 2013 – Crash or correction – Shiller P/E crosses the all important 25

A running theme here at Spreadbet Magazine has been this market’s refusal to revert to the mean. Mean reversion is the quintessential characteristic of price movements but thanks to the hugely distortive effects of quantitative easing, today’s investors/traders/speculators seem largely to have forgotten this. At some point they will be reminded of it, but the question is will this be in the form of a crash or a correction?

As things stand now, I am going to bet on there being a correction, not a crash. I’m certainly not suggesting shorting this market, but rather waiting until a decent opportunity presents itself to get long again.

 

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2nd November 2013 — Baltic Dry at 1500, what is it telling us?

I know we have the charting equivalent of a man crush on the Baltic Dry Index (BDI) at the moment, but it is such an important chart for anyone with the slightest interest in the health of the mining sector. And as regular readers of SpreadBet Magazine will know, if we have a bit of a man crush on the BDI then we are downright obsessive stalkers of miners!

To remind you, the BDI tracks 23 of the world’s busiest shipping lanes. Thanks to the dynamics of the shipping industry the BDI is extremely sensitive to increases and decreases in demand. This makes the chart prone to fairly extreme spikes. It is one of the purest indicators of global economic activity around and has been an excellent leading indicator for mining stocks in the past. The reason for this is because the overwhelming majority of raw materials are still shipped by sea. Therefore, it stands to reason that the more that is being shipped by sea the more materials mining companies are selling; simple really.

 

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12th October 2013 — The Baltic Dry Index screams buy miners

The Baltic Dry Index (BDI) couldn’t be sending any clearer message for resource investors at the moment. It is screaming, as loud as it can, to buy mining stocks!

For once I am not talking about precious metal miners, but rather the producers of raw materials, with real industrial and commercial applications.

 

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11th September 2013 — Sharp move higher in the Baltic Dry Index

The rally in commodity stocks looks like it has legs!

Prices of raw materials have taken a bit of a dip in the last week, but the Baltic Dry Index (BDI) has suddenly soared. The BDI is issued daily by the Baltic Exchange, based in London, and measures the utilisation of 23 of the world’s largest shipping lanes. The overwhelming majority of commodities are still shipped by sea, so the BDI gives investors a fantastic means of gauging global demand. It also serves as a decent proxy for what is really happening in China.

Yesterday, the BDI closed at 1,478, having risen nearly 50% in the last month;

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