The Baltic Dry Index Decline Accelerates

The Baltic Dry Index, a real time economic indicator of world trade continues to disagree with the myriad of Government polished data. I've noted for a over a year now how the BDI has been diverging from the stock market, and has in fact not even come close to the 60 something percent retracement that the market has been able to muster up. Most of the shipping stocks have also been lagging the general market as well in terms of percentage gains and retracement.

Chart 1: Baltic Dry Index - 6 Months

We can see that the Baltic Dry Index has not only been declining, but in fact accelerating, breaking the lower boundary of trend channel.


Chart 2: Baltic Dry Index - 3 Years

Besides accelerating to the down side, we can see that the BDI is back to 2009 levels, when the economy was basically falling apart. While the Baltic Dry Index obviously has not been a fantastic short term market indicator, one has to wonder, why the wild divergence and accelerating downtrend if the economy is truly picking up steam? It did produce a divergence in early 2009, indicating that the economy was indeed bottoming before the stock market realized it, one should at least be aware that the BDI may now be producing an opposite signal.