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Are the Maritime Shippers Running Out of Steam?

Today the transportation index has soared higher after FedEx Corp raised guidance today. Last week the Dow Jones Transportation Index broke out and is now reaching it's June high level. While the move higher is impressive often these types of patterns will need to pullback or consolidate before moving higher. One group within the transports that looks tired here is the maritime shipping stocks.

Dryships Inc (NASDAQ:DRYS) is a leading dry bulk shipping company. The stock has surged higher over the month trading higher by 40.0 percent from the July 1st low. The stock is now getting extended and is nearing important resistance levels. Therefore, at this point many traders and investors should look for a pullback or consolidation in this stock shortly.

Excel Maritime Carriers Ltd (NYSE:EXM) is another leading shipping stock that has rallied sharply higher since early June. This stock is also getting very extended and trading into important resistance. This stock will have important resistance around the $5.80 - $6.00 area. Generally, after such a move higher this stock needs to pullback or consolidate before moving higher.

Navios Maritime Partners L.P. (NYSE:NMM) has been one of the leading shipping stocks in the sector. This stock actually bottomed in late May and has made a series of higher lows which is a bullish
pattern. However, this stock is now very extended and trading into resistance. The stock has important resistance at this current level of $18.25 and will have much more around the $18.85 level. This particular stock does not trade much volume during the trading day, therefore, it can be difficult to trade.

The shipping stocks have all staged a very sharp move higher over the past month. However, these stocks are all very extended at these levels and need to pullback and consolidate if they are going to advance down the road.

Nicholas Santiago
Chief Market Strategist