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This Lagging Sector Is Finally Ready to Play Catch-upBy Jeff ClarkThursday, November 19, 2009 Look who finally joined the economic party...
 The Baltic Dry Index (BDI) tracks the cost of shipping a variety of commodities overseas, and it's one of the most reliable economic indicators available anywhere.
There's a direct correlation between the demand for goods and the cost of shipping them overseas. As demand increases, shippers have less excess capacity and can charge premium rates to ship goods. When demand falls, shippers cut rates to attract whatever limited business there is.
After languishing for most of this past summer and fall, the Baltic Dry Index has all of a sudden come alive and is trading at a new high on the year. Yes, it's still well below the 12,000 level it reached in mid-2008. But the move over the past couple months is nothing if not spectacular.
As a skeptic, I might argue shipping prices have increased largely in response to China buying every raw commodity it can get its hands on. As a believer in the economic miracle of 2009, I'd argue we're in the early stages of a huge economic rebound.
Either way, the short-term direction of this chart is higher. If the rapid increase in shipping costs holds, it should produce windfall profits for shipping companies. And that possibility is starting to show up in the stock prices.
Stocks like Eagle Bulk Shipping (EGLE) and Genco Shipping and Trading (GNK) – which have been wallflowers for most of the stock market's dance party – are finally starting to rally. Take a look...
 GNK broke out to the upside of a five-month consolidating-triangle pattern. The stock is a bit extended in the short term, so it may come back down to retest the breakout level. Ultimately, though, this is a bullish chart and suggests a longer-term price target of about $38 per share.
The charts for just about every other dry shipping stock look the same.
So after months of lagging, after months of watching nearly every other market sector break out to new highs, maybe now the shipping stocks are ready to play catch-up.
Best regards and good trading,
Jeff Clark
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Brazilian stock fund EWZ climbs to 15-month high... up 12% so far in November.
Precious metals surge... GLD and SLV hit all-time highs.
Natural gas tumbles... UNG trades at all-time lows as fuel plummets 26% in a month.
Earnings today... GameStop, Gap, Intuit, Sears.
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