LNG Shipping Sector - Drop With Low Volume

|
Includes: DLNG, GLNG, GLOG, GLOP, GMLP, HMLP, TGP
by: Tomas Novotny
Summary

UP LNG Shipping Indices lost 36 pts during bounce from resistance.

Volume was significantly low last week.

Preferred stocks finally slow out and lost symbolic 5 pts.

Values of UP LNG Shipping Indices for 22nd February

UP Total Return Index -37.93
weekly change -36.7
UP Simple Price Index -251.77
weekly change -36.7
UP Preferred Simple Price Index -111.64
weekly change -5.5
UP Volume Trend Index 755.43
weekly change -548.68

(source: Author)

As you can read on my first article for SA, I have developed a family of indices based on LNG shipping sector. Since that time I published weekly analysis on my SA blog. Because the indices are useful, I start publish the analysis as an article.

About UP LNG Shipping Indices

UP LNG shipping indices consist from the seven most important stocks and units traded on U.S. stock markets. They easily compare trends of stocks with the LNG Shipping industry. Updated weekly here on Seeking Alpha and my web page.

The UP LNG Shipping Index family consists of: UP Total Return Index, UP Simple Price Index, UP Preferred Stocks Index and UP Volume Trend Index. All are composed of major LNG shipping companies and partnerships: Dynagas LNG Partners LP (NYSE:DLNG), Golar LNG Limited (NASDAQ:GLNG), Golar LNG Partners LP (NASDAQ:GMLP), GasLog (NYSE:GLOG), GasLog LNG Partners LP (NYSE:GLOP), Höegh LNG Partners LP (NYSE:HMLP), Teekay LNG Partners LP (NYSE:TGP).

Analysis of Past Week

Looking at the chart of UP Simple Price index, we see that the bounce was quite massive. The index lost 36 points, but it is still less than it had previously earned.

UP LNG Shipping Simple Price Index (source: Author)

This rebound increased power of the resistance and it will be harder to break through it. Now the volume is important, so let's look at it.

UP LNG Simple Price Index with volume (source: Author)

On the chart are painted both support and resistance lines. But most importantly, we see that the volume of decline was almost only half of previous weeks volume. The odds is that the decline will not continue.

On the decline all but two units were involved. The drop ranged around 3%, the most lost GasLog (GLOG) with slightly above-average volume. The two exceptions were Dynagas LP (DLNG) and mainly Teekay LNG LP (TGP), which benefited from the Q4 2018 results.

And so, while the Dynagas volume was ordinary, at Tekay LNG LP (TGP) was significantly above the average. The volume was increased also on both Golar LNG (GLNG) and Golar LP (GMLP).

The Teekay and GasLog conference calls showed that both expect the growth of spot rates again in the second half of this year. This is common in winter, but let us recall that last year's growth began in summer and led to unprecedented high rates. Currently, the rates are back at around 50k USD/day, what is bad news for companies rely on spot market.

In the following chart comparing the development of the UP Total Return index with ETF SPY (NYSEARCA:SPY) we see that LNG shipping industry once again went against the direction of the rest of the market.

UP LNG Shipping Total Return Index vs. SPY (source: Author)

The preferred shares of LNG shipping companies finally slow out after three weeks of continuous growth and lost the symbolic 5 points. But development could have been dramatically different, because while most of the shares moved around zero, the two preferred shares of Dynagas (NYSE:DLNG.PA) (DLNG.PB) lost 4 and 3%, which is a lot. The development was also signed on the volume of both shares, which were above average. But their volume were far from reaching the December values. On the contrary, the shares of Teekay LNG Preferred B (NYSE:TGP.PB) rose 1.3%.

UP LNG Shipping Preferred stocks index (source: Author)

LNG Highlights of Past Week

More About UP Indices

UP indices show summary of LNG shipping stocks and units traded on U.S. markets.

UP Total Return Index shows absolute value which investor received. Full dividend payments are added to the price, so today price includes all previous dividends. After previous month correction it is good to see all the money these stocks have earned.

UP Simple Price Index shows stock price trends of LNG shipping industry.

UP Preferred Stock Index shows price trend of all preferred stocks by the main seven companies and partnerships.

UP Volume Trend Index displays volume evolution.

Calculation

Indices are calculated weekly relative to market capitalisation of each company and partnership. This method assign relative strenght to every stock or unit movement. Initial level was set to 0, time period started two years ago. This time range is sufficient for comparison.

Disclosure: I am/we are long DLNG, DLNG.PA, GMLP. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I also have small position for study purposes in each of other seven stocks included in UP indices.