From the Desk of Ian Culley @IanCulley
Houthi rebels are rampaging in the Red Sea.
The result: Many carriers are taking the scenic route around the Cape of Good Hope in South Africa instead of the Suez Canal.
The longer route brings weeks-long delays and increased costs as the price to ship a 40-foot-long container has nearly doubled since late November.
It won’t be long before those additional charges trickle down to us, the consumer.
What are you going to do?
Buy marine shipping stocks!
Check out our custom equal-weight marine shipping index posting fresh eight-year highs:
I like buying base breakouts, especially when they reclaim critical shelves of former lows (notice the polarity zone marked by the ‘12 and ‘14 troughs and early ‘23 peak).
These often overlooked stocks (seriously, when’s the last time you bought a shipping stock?) are also on the verge of breaking out versus the broader market:
It always bears repeating: The strongest trends outperform their alternatives.
Many of the names in our index will post new highs upon completing this bullish reversal pattern.
While we can’t trade this index, we can trade its components.
JC highlighted one of my favorites during last night’s call – International Seaways Inc. $INSW.
I also ran through a few other stocks in a recent What the FICC? episode.
Today, I’m outlining Torm $TRMD, a $3B Marine Shipper out of London:
Time has taught me to err in the direction of the underlying trend until the market proves otherwise.
An upside resolution above 36.50 kicks off Torm’s next leg higher. I like buying strength above that level, targeting 45 in the coming 2-4 months.
That’s roughly a 30% gain. But I believe it could run much higher. Plus, it dishes out an 18% yield!
What’s not to like?
That’s it for today. Buy shipping stocks!
And as always, stay tuned.
COT Heatmap Highlights
- Commercial hedgers added 46,318 contracts of corn, pushing their long expose closer to a new record (approximately 50,000 contracts away).
- Another week and another record-long position for commercials in Minneapolis spring wheat.
- And commercials hedgers hit a fresh three-year record-long position for soybeans, scooping up more than 60,000 contracts (up from roughly 20,000 last week).
Click here to download the All Star Charts COT Heatmap.
Trade of the Week
Today, we’re highlighting Uranium Energy Corp. $UEC, a $3B uranium miner based in Vancouver, Canada:
UEC is breaking to new all-time highs following decades of little to no progress.
Monster base breakouts such as this signal a significant change in the structural trend.
As the legendary Lousie Yamada says, “The bigger the base, the higher in space,” as these upside resolutions hold exponential profit potential. And few data points are more bullish than fresh all-time highs.
We’re long UEC above 7.40 with an initial target of 11.85 and a secondary objective of 19.10. UES becomes someone else’s problem on a throwback below our risk level.
Thanks for reading.
As always, let us know what you think. We love hearing from you.
And be sure to download this week’s Commodity Report below!
Allstarcharts Team
