Tuesday, January 31, 2017

Here's what you have been missing. [DRYS]

Yesterday Motley Fool put out an article talking about global shipping.  In it they provided various pieces of essentially un-actionable news.  I guess they are providing this to people who think life is too long so they need to fill it up with useless banter.  One of the "news" bits they provided was, "And, of course, no day on the stock market is complete without a double-digit move from dry-bulk vessel owner DryShips (NASDAQ:DRYS) for absolutely no reason whatsoever. Shares are up 13% today.".

Well yes, of course, if you are just going by so called fundamentals and gut feeling then the price move on DRYS was seemingly "for absolutely no reason whatsoever".   I love it when people who write these articles admit they are clueless simply because they cannot tie some news event to a price move.  In these cases, instead of facing the fact that the true fundamentals which move share prices are unknown and in fact unknowable, they simply say "for absolutely no reason whatsoever".

Well I have to call bullshit on that notion!  Just because the author of that article, Tyler Crowe, doesn't know the reason for the move, he thinks there is no reason.  How arrogant!  I'm sure Mr. Crowe is a very smart guy but I'm just as sure that he's not very wise.  Wise men do not let clear evidence of their own fallacy stare them in the face.  Wise men do not write off data simply because it doesn't fit their world view.  Wise men use unexpected data to QUESTION their world view.  Perhaps Mr. Crowe will look at the share price of DRYS today - which is up 100+ percent on the day - and wonder to himself again why this is happening.  He's probably looking for more news but of course there is none.  It's just another mystical day of stock market action which is all a big mystery to him.

But is it really such a mystery?  Could anyone have seen this coming?  Well by the fact that I am writing this you are already beginning to realize that yes, someone could have seen this coming and in fact I did see it coming.  And I did it the only way it is possible to have any chance of doing it and that is through the use of an Elliott wave model.  

On Friday I wrote,"
[DRYS] down another 33% today
I guess the shorts think they are pretty slick taking DRYS down from $50 to $2 in 30 trading days.  I was stopped out again near the open today for a 2% loss and just got back in at $1.98.  This is going to be easy money.  At some point the plummeting will cease and the shorts will panic back into these shares if history serves as any guide.  The play for longs here is simple: stop out easily at the open and then buy the close.  One day it won't go down anymore and the squeeze will be on.  This stock was $8 just a few trading days ago.  It could easily go back to $8 just as quickly.  It was a 75% loss for anyone that just held on but just taking it back up to that level would be a 400% gain for those back in at the bottom.  Now you see why I am playing this game.  I am stalking the shorts here even though they are laughing their asses off right now thinking that to short DRYS is always just free money.   It is until it isn't and then boy isn't it.

Today's kiss of $2 could bring in the bid on Monday.  $2 is often where these leveraged plays catch a bid.

Here is an excerpt from my much more in-depth Saturday update to the subscriber's blog for the DRYS ticker:

"At the same time, the kind of action I am seeing in DRYS is pure arrogance on the part of short sellers and I believe that when it lets loose someone is going to lose an eye.  As I said before, I hope they take DRYS down from the reverse split price of $8 down to $1, a feat which they have very nearly done since then.  Below is the log scale chart which clearly shows that this collapse is now headed straight down into the bottom of black 5.  Whatever happens from here will likely happen very quickly - that's how unicorn tails work.  Down and up in an eye blink with anyone who is operating from a model perspective and without emotion being the big winner.

I would like to remind readers that the recent recapitalization of DRYS means there is pretty much zero chance it will BK any time soon.  Additionally, it is no longer completely dependent on the dry bulk business for revenue having recently acquired oil services (spill clean up) ships as well as LNG carriers.  The first new LNG carrier is already under contract at above market rates.
We will see what happens next week but what I am seeing is likely the final stages of a massive unicorn tail that is going to snap back up quickly into someone's face.  That $2 price tag on DRYS happened in conjunction with the bottoming of another 5 wave count which has been extending for some time now.  Is it the bottom?? That I cannot say and neither can anyone else.  But this is now heading straight down and hit that magickal $2 price tag I have mentioned in the past where people again treat it as a nonexpiring call option.

I'll note for the record that I am pretty much the only one saying this right now.  Everyone else is in emotional hate camp.  Regardless, I like my odds. But I will not bet more than I can comfortably afford to lose if I turn out to be wrong."

So on Friday I was in at $1.98.  Right now I just checked and it is going for $5.34.  You do the percentage math.  In my Saturday post I also gave detailed price targets on where it is LIKELY to go next and what aspects of the Elliott wave principle will be responsible for predicting such moves.   This is the science of monitoring human herding behavior, not gut calls from someone who happens to have a bully pulpit.

If you want access into insights like this that can turbocharge your trading performance, please click the subscribe button above.  Or you can just keep looking to Yahoo and other free "news" for your market timing cues.  But know in advance that you get what you pay for.  Free "news" is worth exactly what you paid to receive it.

1 comment:

Drew said...

Have you been following DRYS lately? I've been trying to count the waves and was expecting another bounce like the one that you described in this post (except possibly three times bigger). But the pattern seems a little bizarre to me at this point. Now I'm thinking that since early February 2017, maybe it's a bunch of corrective patterns forming an ending diagonal or something.

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