- A better-than-expected Q3 earnings report caused momentum traders to chase the shares in after hours with the stock price more than tripling before retreating somewhat.
- The violent momentum rally has elevated the company's valuation well above peers like Castor Maritime and Globus Maritime.
- Drybulk charter rates have retreated by almost 50% from recent with the Baltic Dry Indeex settling at five-month lows on Wednesday thus providing a substantial headwind going into FY2021.
- As evidenced by historical trading patterns, shares are likely to give back most or even all of their gains over the next couple of sessions as momentum traders move on to assumed greener pastures.
- Investors should use the momentum stampede to exit existing positions or even outright short the stock if shares can be located for borrowing.
For further details see:
EuroDry - Sell The Post-Earnings Momentum Rally As Near-Term Outlook Does Not Support Elevated Valuation