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NOL: Cutting losses on a strong rebound.

Thursday, February 2, 2012

Months ago, I made an ill fated decision to go long in NOL. It was a decision based purely on TA and it was a trade that went awry. Straying from my tried and tested methodology of FA + TA plus a lack of a cut loss price has resulted in holding on to paper losses. I should perhaps stick to what I know best.



In more recent times, I traded shares of NOL and made some money. I bought as its price went to a low of sub $1.00 but by $1.22, I had divested. The strength with which its share price broke out of what seems to be a range has taken me by surprise although there were signs that price could have found a floor, if not the bottom.

Even so, the entire upmove in the broader market has taken much more seasoned investors by surprise. Just when we thought the market would be range bound and moving sideways for months to come, Mr. Market decided to shock us.

So, am I euphoric and think that everything is fine now and that prices will recover to what they were a year ago? I am not perfect but I am perfectly aware that, fundamentally, we are not out of the woods. Shipping industry will face a chronic situation of oversupply and weakening demand this year and possibly the next. Higher bunkering fees do not help.

Technically, I see immediate resistance at $1.45 or so and I am using this rebound to cut some losses. If $1.45 should be taken out cleanly and if the bullishness persists, a stronger resistance is at $1.55.

Related post:
NOL: Is the worst over?

6 comments:

SML said...

AK

Agree with you, best time to ride on pp's greed to unlock unprofitable counter.

Leo78

AK71 said...

Hi Leo78,

Cute picture of a sleeping panda! :)

Yes, it might be a loss but it makes sense to sell at resistance or close to resistance.

Ray said...

Hi AK I thought you bought into NOL when it was abt $1?

AK71 said...

Hi Ray,

I did and those I sold at $1.22.

However, I also had some from a longer time ago at $1.80 or so. Ouch. I read the signs wrongly and it sank quickly back then.

I refused to sell as price went to test new lows, prefering to sell on rebounds. So, I am doing that now. :)

jason said...

Container shipping is the better of the 3 evils (in order of "evils" from least to most - container-tanker-drybulk)
e.g hanjin reported full yr loss of US$740m....yux. But fortunately the Asian box carriers are consolidating their fleets in a bid to cut capacity and try to increase TEU rates. Asian = OOCL, NOL, Yangming, Evergreen, COSCO, Hanjin, NYK, MOL, K-Line etc. The over capacity here not as chronic as the rest - just that the main trade lanes of Europe-USA and Asia-Europe are worst hit - hence the severe bleeding. Not to mention bunker fuel prices at record highs again (near peaks of 2008)

AK71 said...

Hi Jason,

Good to hear from you. It seems like the thing to do is to avoid investing in all shipping companies for the time being. Thanks for the input. :)

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