The Baltic Dry Index (BDI) was trading at around 4,220 points by mid-September 2021 showing another string of upbeat movements as it reached once again its recent highs, following a minor short-term correction.
Concerning the previous period, the Index traded at around 3,650 points in mid-August 2021 versus 3,281 points on August 4, 3,058 points on July 21st, 3,179 pts on July 5th, 2021, but also compared to 2,420 pts around May 2021.
A key question for the Index at this stage could be as follows:
Are these levels a good entry point for market participants and investors alike?
As most of the times, there are two sides of the coin worthy to be mentioned when answering the question:
The one side says that based on the current momentum and the strength that the market has been demonstrating so far, the level of 4,200 points would still be a good entry point for someone looking to place a long position.
The other side of the coin indicates that historically, meaning over the past 25 years, the Index has not manage to keep such high trading levels for much long. The maximum period of the Index holding on to such high levels has been 12-18 months.
And perhaps what it matters most for someone thinking of taking a long position, given the current uptrend of the market, is the fact that historically again such high levels have been very volatile from time to time resulting into sharp corrections.
With the above thoughts in place, we would be inclined, very roughly, to give a 40% chance for the market to go higher and 60% for a neutral or opposite direction.
FIGURE 1: Baltic Dry Index (BDI) – Last 1 Year up to September 2021
[Bloomberg ticker: BDIY:IND, BDI Baltic Exchange Dry Index]
FIGURE 2: Baltic Dry Index (BDI) – Last 36 Years up to September 2021
[Bloomberg ticker: BDIY:IND, BDI Baltic Exchange Dry Index]
