Shipping Stocks Breakout: Potential Surprise in Market as BOAT ETF Gains Traction
The shipping sector is quietly making waves in the market as shipping stocks show signs of a breakout. This comes as a surprise to many investors who expected the sector to weaken following the Covid-19 crisis and global economic instability. However, with the crisis behind us and borders reopening, shipping stocks are gaining momentum.
The SonicShares Global Shipping ETF (BOAT) is leading the charge, providing diversified exposure to the shipping space, particularly in international shipping stocks that are typically inaccessible. The ETF has recently broken out of a 1.5-year base on high volume, indicating strong bullish sentiment.
One of the shipping companies within the ETF, ZIM Integrated Shipping Services (ZIM), has experienced a significant breakout recently. The stock broke out of a flag pattern with high volume, driven by the news of Maersk halting Red Sea shipping due to Houthi attacks. This unexpected catalyst propelled ZIM to rise over 60% on high trading volume. Additionally, short interest in the stock is elevated, indicating potential short squeeze opportunities.
Other shipping stocks, such as Navigator Holdings (NVGS) and International Seaways (INSW), are on the verge of breaking out of large multi-month bases. NVGS, in particular, is trading at the breakout pivot of a base it has been building since April 2016. INSW is forming a cup-and-handle bullish pattern, suggesting a potential breakout to the upside.
To gain exposure to the shipping sector, investors can consider the BOAT ETF, which holds a diversified portfolio of shipping stocks listed in various exchanges globally. This ETF allows investors to access international shipping stocks that may be difficult to trade individually. The expense ratio of the BOAT ETF is 0.69%, making it a cost-effective choice.
It is worth noting that the market has priced in a potential recession in 2024, with expectations of six rate cuts throughout the year. However, the strength of the technical charts in the shipping sector contradicts these recessionary fears, adding validity to the sector’s relative strength.
While the BOAT ETF can be seen as a thematic capital gains play, it also offers a decent dividend yield of 8.72%, providing a potential income stream for investors. The ETF has a net AUM of $37 million and average trading volume of 33k shares per day.
In conclusion, shipping stocks are experiencing a breakout, defying expectations of a weakening sector. The BOAT ETF provides an opportunity to gain diversified exposure to international shipping stocks, which have shown promising technical charts. As the market anticipates a recession in 2024, the shipping sector’s relative strength is noteworthy. Investors looking to capitalize on this trend may consider adding exposure to the shipping sector through the BOAT ETF.
(Note: This article is for informational purposes only and should not be considered investment advice. Trading stocks and ETFs involves risk, and readers should conduct their own research and consult a financial advisor before making any investment decisions.)
