The tanker market is being heralded as one the main “beneficiaries” of the war in Ukraine and the shift that this sad development has created in trade flows. In its latest weekly report, shipbroker Allied Shipbroking said that “with the start of the final quarter of the year, it is now unequivocal that the market regime shift noted in the tanker sector these past couple of months is here to stay. After a prolonged period of poor performance and problematic fundamentals, things shifted incrementally towards a more bullish trajectory”.
According to Allied’s Quantitative Analyst, Mr. Thomas Chasapis, “at this point, given that we have already reached period high levels both in terms of earnings and asset prices, most are now looking to assess both the duration of this current trend, as well as the overall market’s potential and opportunities moving forward. We have once again taken a technical analysis approach to try and capture the current market’s momentum and better indicator for any given market shift. We use the TRIX indicator derived (and equally weighted) from asset price levels of 5yr old units of all the main tanker size segments (VLCC, Suezmax, Aframax and MR). This was then compared against the average asset price levels for 5yr units as well as the average TRIX for 1yr period TC freight rates for these size segments”.
“As a quick recap, the TRIX shows the rate of change within a 15-period moving average that has been smoothed exponentially 3 times. It is typically used both as an oscillator for overbought and oversold conditions as well as a momentum indicator. The TRIX (on asset prices) once again proves to be a very good zero-line crossover signal for most situations where asset prices experienced a hefty shift in trend direction and momentum. On the other hand, if someone were to use a more complex approach and utilize the period market’s momentum (as reflected through its TRIX indicator) as a substitute signal for asset prices, they would find it to be relatively slow in terms of positioning. That does not mean uncorrelated, but rather that the zero-line crossover signal, in this case, comes in at a delay”, Mr. Chasapis said.
He added that “although the graph above covers a 10-year period, for an in-depth macro analysis, this time span may seem relatively small and misleading in many ways. To put it simply, we should not rush to conclude an abundance of bullishness. On the other hand, we cannot neglect how “strong” the signals are at this point. For the time being, it would be interesting to take a different angle and interpret the situation offbeat. Look how, even for different indices and market approaches, peak to bottom ranges have been seemingly widening, when keeping the same duration. This raises the question of how protected the market is in the face of rising volatility (regardless of the direction) at this point”, Allied’s analyst concluded.
Source: Hellenic Shipping News