Shares of TOP SHIPS Inc (NASDAQ:TOPS) surged higher as an incredible, Trump-induced rally swept up down-and-out shipping companies.
The stock leapt up 12.99% to close at $6.09 on Wednesday, on volume of 12.28 million shares. That was fifteen times its average volume, so heavy was the investor interest. The gains added to the 58.5% leap on Tuesday.
This has probably not been noticed, but the current rally in Tops is eerily similar to its earlier rally in late July 2016, which commenced from the low of around $1.50 but reached a peak of $8.40. The current, Trump-ignited rally commenced at $2.00 and reached a similar high of $8.40. Both rallies were supported by exceptionally high volume.
It looks like Tops has hammered out a bottom in the range of $1.50 to $2.00.
What Trump did to TOP SHIPS Inc (NASDAQ:TOPS) (and other shippers)
Quite simply, Trump’s promises of heavy investment in revamping America’s infrastructure lit a fire across sectors such as construction, shipping and base metals such as copper. The infrastructure rebuilding would require huge amounts of commodities and materials, and the shipping companies would transport these.
Consider the following moves Wednesday in shipping:
Diana Containerships +109.45%
Scorpio Tankers +7.92%
Navios Maritime +10.43%
DryShips, a dry bulk carrier, was halted after it rose 70% on Tuesday, on top of a phenomenal 215% rise on Monday.
Shipping companies had been given up for dead by the stock market given the oversupply of tonnage, the epic slowdown in commodities, shrinking global growth and weak balance sheets swamped by high debt.
Many of them had been heavily shorted, and at least one stock is said to be in a monumental short squeeze. So the tide may be turning
However, Trump may only a part of the story.
Things may be fundamentally changing for the better in the industry as a whole. The Baltic Dry Index, which measures global shipping rates for the transport of commodities, has been on an upswing in recent weeks.
Short squeeze, Trump or the Baltic? It’s difficult to say, but whatever the reason, sunny days are likely here for shipping.