DRYS DryShips over the past year has had some really huge swings and enormous daily volumes. It rallied from a price of 3 to 16 in the past and then made a double bottom and rallied from 3 to 11. Clearly DRYS is capable of making some big moves on the upside and downside.
The current structure of the chart suggests to me that DRYS is still not done with its bear market yet despite the huge intermittent rallies. It has a strong down trending force defined by the green down trendline and so far has obeyed that downward force. Price has not been able to break above this line.
So we still have a generally bearish trend in DRYS.
The reason why I am bringing it to your attention is because I can see the possibility that DRYS could be headed for a triple bottom by October 21st 2009. If that event occurs then it could potentially set up an outstanding DRYS trade.
It would place DRYS in the 3.00 range and could end up making a triple bottom formation and bring it close to the end of the downtrend in force for almost a year.
One could argue that DRYS is in a descending triangle formation and that if we get to the 3.00 level again that it will be broken to the downside. That is certainly possible, but it is one of those things we just won’t know until it happens.
My preferred scenario is for DRYS to get to 3.00 and then get a good bounce going off of that level that may be strong enough to break through the green down trend resistance line.
But DRYS has a lot of work to do. And it is still unknown whether or not it will be able to get a decline deep enough to reach 3.00 again.
If it does, I can assure you that I will be writing about DRYS it again.
I have set up a bunch of email alerts on DRYS. One of them will send me an email if DRYS hits and goes lower than 4.90. That will then cause me to look at the chart again and see if it may continue the down trend. If and when it does hit that alert I will set up a few more alerts at that time to see if it can push lower still.
So my take on DRYS is that it has the future potential of being a great setup. If for some reason it breaks upward through the green down trendline in the next month or two, then I will still leave it alone because that was not the setup I was looking for.
This is one of those potential setups that takes a lot of patience, but if it develops as described, it could potentially be a very good risk/reward pattern.