News Content
Shipping ETF Looks to Cement Leadership, Breakout
Sometimes misunderstood, sometimes overlooked among transportation exchange traded funds, the Guggenheim Shipping ETF (NYSEArca: SEA) is arguably a gem for traders looking for an accurate reading on near- to medium-term risk appetite.
Just do not make the mistake of assuming that SEA trades in lockstep with the Baltic Dry Index, a measure of daily charter rates to ship a variety of commodities. SEA holds 27 stocks and that group does NOT include day trader favorites such as DryShips (NasdaqGM: DRYS), Baltic Trading (NYSE: BALT), Diana Shipping (NYSE: DSX) and related firms. It is a good thing that SEA is not intimately linked to the Baltic Dry Index’s fortunes because the index has struggled recently.
SEA has not. The fund is up 2.9% to start 2014, a performance that is more than twice as good as the iShares Transportation Average ETF (NYSEArca: IYT). SEA has also made its way back to its highest levels in two and a half years as the S&P 500 and the iShares MSCI ACWI ETF (NasdaqGS: ACWI) have started the year in the red. Tuesday’s close above $22 could prove significant for SEA.
“In the later half of 2013, SEA was trading in a pretty tight range, but still managed to post a 34% gain for the year. In late December, it broke out of its range and continued higher into 2014, hitting a 52-week high today. Looking at the daily 6-month chart, SEA also recently broke out of a pennant continuation pattern, which suggests more upside,” according to Tom Psarofagis of AGD Capital Management.
Psarofagis notes that the $22 area has previously been stiff resistance for SEA, confirming the notion that a string of closes above that price point should encourage fresh buying.
“If SEA can follow through with some momentum and break that level, it should see calm seas ahead,” Psarofagis added.
A key element to SEA’s success is its correlation, one that is often forgotten, to the Baltic Tanker Dirty Index, the green line in the chart below. Seems encouraging, does it not?
Source: ETF Trends
Just do not make the mistake of assuming that SEA trades in lockstep with the Baltic Dry Index, a measure of daily charter rates to ship a variety of commodities. SEA holds 27 stocks and that group does NOT include day trader favorites such as DryShips (NasdaqGM: DRYS), Baltic Trading (NYSE: BALT), Diana Shipping (NYSE: DSX) and related firms. It is a good thing that SEA is not intimately linked to the Baltic Dry Index’s fortunes because the index has struggled recently.
SEA has not. The fund is up 2.9% to start 2014, a performance that is more than twice as good as the iShares Transportation Average ETF (NYSEArca: IYT). SEA has also made its way back to its highest levels in two and a half years as the S&P 500 and the iShares MSCI ACWI ETF (NasdaqGS: ACWI) have started the year in the red. Tuesday’s close above $22 could prove significant for SEA.
“In the later half of 2013, SEA was trading in a pretty tight range, but still managed to post a 34% gain for the year. In late December, it broke out of its range and continued higher into 2014, hitting a 52-week high today. Looking at the daily 6-month chart, SEA also recently broke out of a pennant continuation pattern, which suggests more upside,” according to Tom Psarofagis of AGD Capital Management.
Psarofagis notes that the $22 area has previously been stiff resistance for SEA, confirming the notion that a string of closes above that price point should encourage fresh buying.
“If SEA can follow through with some momentum and break that level, it should see calm seas ahead,” Psarofagis added.
A key element to SEA’s success is its correlation, one that is often forgotten, to the Baltic Tanker Dirty Index, the green line in the chart below. Seems encouraging, does it not?
Source: ETF Trends
Latest News
- For the first time, tianjin Port realized the whole process of dock operati...
- From January to August, piracy incidents in Asia increased by 38%!The situa...
- Quasi-conference TSA closes as role redundant in mega merger world
- Singapore says TPP, born again as CPTPP, is now headed for adoption
- Antwerp posts 5th record year with boxes up 4.3pc to 10 million TEU
- Savannah lifts record 4 million TEU in '17 as it deepens port
