This shipping stock appears to have turned the corner and looks poised to breakout from its current consolidation.
NEW BULLISH Plays
Overseas Shipholding Group - OSG - close: 37.09 change: +0.09
Stop Loss: 35.75
Target(s): 39.90, 42.00
Current Option Gain/Loss: + 0.0%
Time Frame: 4 to 6 weeks
New Positions: Yes
Overseas Shipholding Group, Inc., a Dow Jones Transportation Index company, is one of the largest publicly traded tanker companies in the world. As a market leader in global energy transportation services for crude oil and petroleum products in the U.S. and International Flag markets, OSG is committed to setting high standards of excellence for its quality, safety and environmental programs. OSG is recognized as one of the worldâ€™s most customer-focused marine transportation companies and is headquartered in New York City, NY. (source: company press release or website)
Why We Like It:
Shipping stocks have been underperforming the market for months. Yet OSG seems to have turned the corner. Shares spent two months building a new base near $32.00. Now in the last few weeks the stock has reversed higher and the point & figure chart has turned bullish (with a long-term target of $48). On a short-term basis OSG has been consolidating sideways but with a bullish trend of higher lows. The stock looks poised to breakout over resistance near $37.00 and make a run at the $40 level. If OSG can breakout to new relative highs the stock could see a short squeeze. The most recent data listed short interest at 20% of the float.
We should consider this trade higher risk. The Baltic Dry Goods index has been falling, which suggest shipping rates are sinking. OSG has managed to trend higher in spite of this decline in the $BDI. Investors should also be worried about the long-term trend of lower highs in OSG. Keep your position size small to limit risk.
Suggested Position: Buy OSG stock @ current levels
- or -
Buy the 2011 January $40 calls (OSG1122A40) current ask $1.10
Entry on November 23 at $xx.xx
Earnings Date 03/01/11 (unconfirmed)
Average Daily Volume: 600 thousand
Listed on November 22nd, 2010