As noted on the 18/7/16 the Capesize index which had looked like it was stalling is now starting to reverse its upward move and is now some US$773 lower at US$5,625. Technical support is now between US$4,798 and US$4,765 for the index, as this has been the range support since late April. A close below these levels would be considered bearish, though at this point this is still US$830 away.

Front end Cape futures have now started to come under pressure as expected with the August futures over US$600 lower. Notably we have witnessed the breaking of the primary trend support (US$7,375) and a move below the lower Bollinger Band.

At this point front end momentum remains bearish with the slow stochastic average line continuing to point down. The faster period stochastic at 17 is starting to enter oversold period. This doesn’t have a bullish implication at this point, and would suggest that any upward swing in price is likely to find resistance in the break of the recent double bottom at US$7,320.

Back end futures have proved to be more resilient, however yesterdays close at US$7,421 is now below the primary trend support. Like the front end longer term momentum remains bearish though also like the front end the faster period stochastic is now in oversold. Shorts should expect resistance at the previous primary trend support of US$7,480, although bearish the back end downside does look more limited with logical support at the US$7,150 and US$7,000 levels.

As expected the front Cal 17 Panamax has continued to weaken and is now on the lower Bollinger Band. Again medium term momentum remains weak, and this would suggest that over time the Cal 17 futures should continue to price lower.

The Shorter period Stochastic is now showing a bullish divergence, and those trading outside of a hedging facility should pay heed to this. This isn’t an immediate buy signal but it is a warning that shorter period momentum is now weakening and a potential upswing is due. Sellers should look for resistance between US$5,880 and US$5,950, a close above the second resistance would suggest that the bulls are taking back control.

Front end Panamax index has shown very small signs that it could be turning via lower pricing, the stochastics remain at extremes, though the RSI at 91 is looking extremely bearish suggesting the technical picture for the index could be about to change.

August futures had looked strong except for the forming of a bearish divergence in the shorter period stochastic. The futures have dropped of pretty hard in the last couple of days changing the dynamics of the technical picture, as it has broken the US$6,418 support set on the 12/7/16. It is worth noting that the primary trend support currently sits around the US$5,700 level A) Because this could be a target for technical sellers, and B) Because technically above this level the futures are still considered as bullish.

If the August futures fail to hold above the 21 period moving average (US$6,236) then we should see more selling pressure, more importantly this could (not definite) turn the longer term momentum bearish, signalling that any rallies will now be selling opportunities, rather than a continuation of the bullish trend.

Right now we are seeing an almost identical technical with the Supramax as we are with the Panamax. The index momentum is slowing though the stochastics remain at extremes, the RSI at 95 looked over cooked suggesting that we could see a reversal in the index.

August futures have now started to turn lower, and more importantly the slow stochastics are as well, indicating that the bullish momentum move could be drawing to a close. Close attention should be paid to the primary trend as we are upon it (US$7,000) a close below here will alert technical sellers to enter the market from the sell side.

Cal 17 futures are behaving as expected and have started to move lower and the secondary trend support is now clearly broken. Like the Panamax Cal 17 there is a bullish divergence forming on the faster period stochastic, however with the longer term momentum being still bearish and at 78 this is likely to create favourable selling opportunities. Resistance should be found at the previous support of US$6,200.

Source: Freight Investor Services