EURN Splashing Everywhere (EURN,SEA)

Is it only us, or have y’all noticed the striking resemblance between Recep Tayyip Erdoğan and Walter Cronkite?

Now, we’re no everyday peddlers of web-tangle conspiracies, but to whose advantage would it be if the Turkish leader were to be given a splash more credibility because of his CBS Nightly debonair look?

The Russians?

The Zionists?

Maybe the Kurdish Congressional Coterie?

Or Hilary…?

Hmm…

And while we’re at it, did anyone notice the Turks helping the Chinese and Iranians skirt American sanctions?  Hm?  Anyone…?

Because that’s where our trade lies today, friends – precisely at that point where sea-going vessels haul flank at 0-dark-thirty.

Since the U.S. decided to sanction Chinese shipping giant COSCO for helping Tehran, rates for VLCCs, suezmaxes, aframaxes and panamaxes all shot higher.

The question of availability of ships to the Far East also pushed stock prices higher for all those who could snag an available contract.

And that included Belgium-based Euronav N.V. (NYSE:EURN), whose shares soared by 50% over the last 40 trading sessions.

Have a look –

We’ve added the Invesco Shipping ETF (NYSE:SEA) to the mix for the sake of comparison, and to help us out when it comes time to trade.

But first the technicals –

• To begin, a 50% rise under the current conditions is not sustainable. Eventually the matter will be sorted out, with purchasers opting for closer and cheaper alternatives, or a broad deal being struck between the U.S. and China that solves the shipping issue.  But in the meantime, EURN has had some fun.
• Too much fun. The volume spike (in black), and
• The overbought RSI read (in green), speak to a retrenchment now in the making.

This one simply got away from itself.

And we’re playing it as follows –

EURN has followed very roughly the ebbs and tides of the broader shipping sub-sector, as represented by SEA, but the last two weeks have been exceptional.  The black squiggle on the right of the chart shows the gap that’s opened since sanctions were ordered.

Expect EURN to pull back into line with its brethren in fairly short order.

A Jew and His Gold recommends you short 100 shares of EURN at the market (now trading at $10.49) and purchase 100 shares of SEA, currently going for $8.99.  Total credit on the trade is $2.50.

We’ll profit as the gap between the two closes.

Many happy returns,

Matt McAbby

Follow @HughLOHaynew