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MARITIME SENTIMENT INDEX HAS NOT REACHED ITS TROUGH YET
As we are publishing the "Notos Maritime Sentiment Index" on a regular basis, today we would like to draw your attention to its potential predictive power for past turning points in shipping equity markets.
The second graph shows the "Notos Maritime Sentiment Index" for the period 2008 up to now. This sentiment index is calculated as the average of six subindices measuring stock market prices and risk as well as charter rates and vessel prices. The sentiment index is normalized between -1 and +1.
We highlight turning points in the sentiment's 50-days moving average below -0.4 and above +0.4 with green circles and red circles, respectively. Thereafter, we transferred these circles to the upper graph which displays our "Notos Shipping Index".
Each circle represents one turning point, for either subsequent upside moves (green) or downside moves (red). So far, we identified eight closed moves between 2008 and 2019 and one ongoing move (red) thereafter.
With respect to the current market environment, we interpret the sentiment as to stay on the sideline. The 50-days average of the sentiment index has already reached -0.2. This level is not really convincing enough for us to open a new short position. Instead, for potential long term investments, we rather think about putting the cash aside and waiting for the opportune moment to re-enter the market once the 50-days average is turning around on or below -0.4.
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