Maybulk has rebounded from its uptrend line support

On April 24, I've posted on Maybulk's correction that might see the stock testing its short-term uptrend line at RM4.00, which I believe would be a good entry level for this stock (go here). Since then, Maybulk share price has drifted lower, tested its uptrend line & went below it marginally before recovering (see Chart 1 below).

Two reasons could have contributed to the recovery. Firstly, Maybulk has fixed the 'ex' date for its 1:4 Bonus Issue yesterday ('ex' date being May 21st). Secondly, Maybulk will continue to benefit from the on-going parabolic rise in shipping rates. To have an idea of how much shipping rates have gone up, take a look at the Baltic Exchange Dry Index (BDI) chart below (Chart 2). From the chart, you can see that BDI has recently surpassed its 2004 high of just under 6400. As at May 9th, BDI spot rates closed at 6478. With these positive developments, there is a good chance we may see Maybulk testing the recent high of RM4.50/52.


Chart 1: Maybulk's daily chart as at May 9 (courtesy of Quickcharts)



Chart 2: Baltic Exchange Dry index (BDI) as at May 9 (courtesy of Investmenttools.com)