Throw the sailing metaphors out the window because it is best to simply say the Guggenheim Global Shipping ETF (NYSEArca: SEA) has been a solid performer over the past three months.
Over that time, SEA has jumped 10.5%, buoyed by a phenomenal run in the Baltic Dry Index (BDIY). The Baltic Dry Index , which measures daily charter rates to ship a variety of commodities across the globe, has nearly doubled over the past three months.
However, the association with the Baltic Dry Index is one of the biggest misnomers surrounding SEA. The BDI is not a stock index, rather it is an assessment of the price shippers are charging on a given day to move to coal, grains and related fare.
SEA tracks the Dow Jones Global Shipping Index and that difference cannot be overstated. The ETF is up 31% in the past year, but the BDI has nearly tripled. [Shipping ETF Riding a Wave]
The $72.5 million SEA, although it is not directly linked to the BDI, could still offer upside, particularly if the ETF can find support at $20. It closed at $20.17 on Monday.
“After breaking out from a base around $18, and stalling just above $20, SEA pulled back to find support at the rising 10-week moving average,” said Deron Wagner of Morpheus Trading Group. “Last week’s price action followed through on the previous week’s bullish reversal candle, but stopped just shy of breaking out to new highs.”
Although SEA may appear extended after a 21.2% year-to-date, upside from current levels could be significant.
“Whether $SEA breaks out this week or in a few weeks from now, there is very little overhead above $20. Once it clears that level, it could potentially run to the next major resistance level (around $25),” Wagner added.
SEA features a decent 30-day SEC yield of 3.18%. At the country level, the ETF features double-digit allocations to the U.S., Denmark, Hong Kong, Japan, Bermuda and Greece.[Famous Investors Like Greece]
Guggenheim Shipping ETF
ETF Trends editorial team contributed to this post.