FRO LONG - World's Largest Oil Shipping Company
Hello everyone, today I'm taking a look at FRO (Frontline Ltd.) - The world's largest oil shipping company.
*This is my observation, and I am posting for educational purposes - this is NOT financial advice*
As we all know, OIL is having a supply & demand problem and has an overabundance of supply, alongside a decreased demand due to the corona-virus etc. It is being said that we are maxing out our global on-shore storage supply at an alarming rate and could run out of storage by as early as May of this year if current conditions remain constant. That means that nearly all of these oil shipping companies containing large storage / cargo-ships are holding their max capacity of barrels of oil with no set travel-destination or buyer. With people not feeling safe traveling (or can't travel) during these times (pandemics, recessions etc.) - all of the produced oil still needs a place to be stored (oil companies can't simply "close" their drills or stop production, it is very expensive etc.)... which results in onshore oil storage companies, such as FRO, to operate at, or near, max capacity for however long that period of time may last - which is great for those select companies!
I think you'll like to see this side-by-side comparison of FRO with the DJI throughout our previous recessions / significant down-trends that have happened in the past 20 years (using the weekly chart). What you will find is that when the DJI begins a significant downtrend, FRO begins an uptrend, and exactly in the middle of each significant downtrend is when FRO has peaked / reached a swing high. The 3 examples I will be comparing will be during the following set of years: #1: 2000-2002, #2: 2007-2009, #3: 2020-Current
In the below examples, I have labeled the following on each chart with colored vertical lines:
Example #1 & #2 = Swing high of the uptrend / beginning of downtrend (Orange), Mid-point of the downtrend (Green), Swing low of the downtrend (Purple).
Example #3 / Forecast #1 = Swing high of the uptrend / beginning of downtrend (Orange), Projection for the mid-point of the downtrend (Green), Projection for the swing low of the downtrend (Purple).
Example #3 / Forecast #2 = Swing high of the uptrend / beginning of the downtrend (Orange (same line for Forecast #1)), Projection for the mid-point of the downtrend (Red), Projection for the swing low of the downtrend (Black).
Example #1 (2000-2002):
DJI - Set a swing high on the week ending (WE) 1/10/00, then set a swing low on the WE 10/7/02 - having a significant downtrend that lasted for a period of 143 weeks, or 1001 days, before reversing to an uptrend - Total % decrease = 38.75%
FRO - The WE 1/10/00 when DJI set a high, the low price during that week was $11.46, and began an uptrend that rallied to a high of $67.04 (a 484.99% increase) that peaked exactly at the 50% mark of the DJI downtrend - which lasted 71 weeks, or 497 days.
Example #2 (2007-2009):
DJI - Set a swing high on the WE 10/8/07, then set a swing low on the WE 3/2/09 - having a significant downtrend that lasted for a period of 73 weeks, or 533 days, before reversing to an uptrend - Total % decrease = 60.72%
FRO - The WE 10/8/07 when DJI set a high, the low price during that week was $220.31, and shortly after began an uptrend that rallied to a high of $361.80 (a 64.22% increase) that peaked exactly at the 50% mark of the DJI downtrend - which lasted 36 weeks, or 252 days.
Example #3 (2020 - Current) - Includes a Hypothesis & Forecast:
DJI - Set a swing high on the WE 2/10/2020, which is currently playing out as we are in the midst of this downtrend. Although it is still playing out, we have set a previous (possibly temporary), low of $18,213.70 from the swing high of $29,568.60 on the WE 3/23/2020 - A total % decrease of 38.40% in 6 weeks, or 42 days.
FRO - The WE 2/10/2020 when the DJI set a high, the low price during that week was $7.85, and has now began an uptrend which is currently rallying with a high of $11.55 on the current weekly candle - a current % increase of 47% throughout weeks, or 70 days (as of Friday, 4/24/2020).
Hypothesis:
Since oil is just now becoming a major problem as of recently, we can expect for companies such as FRO to continue to thrive during these current market conditions that are taking place around the world. By going off of this set of data, we can say with a degree of confidence that when the stock prices of on-shore oil shipping companies set swing highs, we could use that correlation as a mid-way marker / indicator of how long the DJI downtrend will last. As these oil-related problems are just now arising, it is probable that these conditions may continue for a while in the near future, therefore, now would seem like a great time to open a mid-term long position in my opinion.
Forecasts:
I have created two rather simple Forecasts which are merely following the trend of data that I have analyzed and compared in the previous two examples. As we can see, the amount of time between the swing high and swing low for the DJI in example #1 lasted for 143 weeks, or 1001 days - and we can see that for example #2, the length of time between the DJI's swing high and swing low was 73 weeks, or 533 days - which is very close to 50% (as close as we can get on a weekly chart).
Forecast / Projection #1: If we were to keep that data constant and follow the same trend - we can possibly predict that this downtrend could last roughly 50% as long as the last significant downtrend, meaning that this downtrend would end / set a swing low on the WE 10/26/2020 along with the probability that FRO could likely set a swing high in the middle of that range on the WE 6/15/2020.
Forecast / Projection #2: If we were to take the length of time between the DJI's swing high and swing low from the previous two examples (143 weeks, 73 weeks) and added them together (216 weeks), then divided that number by 2 in order to find the average length of time between the DJI's swing high and low, we would get 108 weeks, or 756 days - Meaning that this downtrend would end / set a swing low on the WE 3/7/22 along with the probability that FRO could likely set a swing high in the middle of that range on the WE 2/22/21.
Let me know what you think below!
If you enjoy my content, please 'like' and 'subscribe' for more!
Thank you.
*This is my observation, and I am posting for educational purposes - this is NOT financial advice*
As we all know, OIL is having a supply & demand problem and has an overabundance of supply, alongside a decreased demand due to the corona-virus etc. It is being said that we are maxing out our global on-shore storage supply at an alarming rate and could run out of storage by as early as May of this year if current conditions remain constant. That means that nearly all of these oil shipping companies containing large storage / cargo-ships are holding their max capacity of barrels of oil with no set travel-destination or buyer. With people not feeling safe traveling (or can't travel) during these times (pandemics, recessions etc.) - all of the produced oil still needs a place to be stored (oil companies can't simply "close" their drills or stop production, it is very expensive etc.)... which results in onshore oil storage companies, such as FRO, to operate at, or near, max capacity for however long that period of time may last - which is great for those select companies!
I think you'll like to see this side-by-side comparison of FRO with the DJI throughout our previous recessions / significant down-trends that have happened in the past 20 years (using the weekly chart). What you will find is that when the DJI begins a significant downtrend, FRO begins an uptrend, and exactly in the middle of each significant downtrend is when FRO has peaked / reached a swing high. The 3 examples I will be comparing will be during the following set of years: #1: 2000-2002, #2: 2007-2009, #3: 2020-Current
In the below examples, I have labeled the following on each chart with colored vertical lines:
Example #1 & #2 = Swing high of the uptrend / beginning of downtrend (Orange), Mid-point of the downtrend (Green), Swing low of the downtrend (Purple).
Example #3 / Forecast #1 = Swing high of the uptrend / beginning of downtrend (Orange), Projection for the mid-point of the downtrend (Green), Projection for the swing low of the downtrend (Purple).
Example #3 / Forecast #2 = Swing high of the uptrend / beginning of the downtrend (Orange (same line for Forecast #1)), Projection for the mid-point of the downtrend (Red), Projection for the swing low of the downtrend (Black).
Example #1 (2000-2002):
DJI - Set a swing high on the week ending (WE) 1/10/00, then set a swing low on the WE 10/7/02 - having a significant downtrend that lasted for a period of 143 weeks, or 1001 days, before reversing to an uptrend - Total % decrease = 38.75%
FRO - The WE 1/10/00 when DJI set a high, the low price during that week was $11.46, and began an uptrend that rallied to a high of $67.04 (a 484.99% increase) that peaked exactly at the 50% mark of the DJI downtrend - which lasted 71 weeks, or 497 days.
Example #2 (2007-2009):
DJI - Set a swing high on the WE 10/8/07, then set a swing low on the WE 3/2/09 - having a significant downtrend that lasted for a period of 73 weeks, or 533 days, before reversing to an uptrend - Total % decrease = 60.72%
FRO - The WE 10/8/07 when DJI set a high, the low price during that week was $220.31, and shortly after began an uptrend that rallied to a high of $361.80 (a 64.22% increase) that peaked exactly at the 50% mark of the DJI downtrend - which lasted 36 weeks, or 252 days.
Example #3 (2020 - Current) - Includes a Hypothesis & Forecast:
DJI - Set a swing high on the WE 2/10/2020, which is currently playing out as we are in the midst of this downtrend. Although it is still playing out, we have set a previous (possibly temporary), low of $18,213.70 from the swing high of $29,568.60 on the WE 3/23/2020 - A total % decrease of 38.40% in 6 weeks, or 42 days.
FRO - The WE 2/10/2020 when the DJI set a high, the low price during that week was $7.85, and has now began an uptrend which is currently rallying with a high of $11.55 on the current weekly candle - a current % increase of 47% throughout weeks, or 70 days (as of Friday, 4/24/2020).
Hypothesis:
Since oil is just now becoming a major problem as of recently, we can expect for companies such as FRO to continue to thrive during these current market conditions that are taking place around the world. By going off of this set of data, we can say with a degree of confidence that when the stock prices of on-shore oil shipping companies set swing highs, we could use that correlation as a mid-way marker / indicator of how long the DJI downtrend will last. As these oil-related problems are just now arising, it is probable that these conditions may continue for a while in the near future, therefore, now would seem like a great time to open a mid-term long position in my opinion.
Forecasts:
I have created two rather simple Forecasts which are merely following the trend of data that I have analyzed and compared in the previous two examples. As we can see, the amount of time between the swing high and swing low for the DJI in example #1 lasted for 143 weeks, or 1001 days - and we can see that for example #2, the length of time between the DJI's swing high and swing low was 73 weeks, or 533 days - which is very close to 50% (as close as we can get on a weekly chart).
Forecast / Projection #1: If we were to keep that data constant and follow the same trend - we can possibly predict that this downtrend could last roughly 50% as long as the last significant downtrend, meaning that this downtrend would end / set a swing low on the WE 10/26/2020 along with the probability that FRO could likely set a swing high in the middle of that range on the WE 6/15/2020.
Forecast / Projection #2: If we were to take the length of time between the DJI's swing high and swing low from the previous two examples (143 weeks, 73 weeks) and added them together (216 weeks), then divided that number by 2 in order to find the average length of time between the DJI's swing high and low, we would get 108 weeks, or 756 days - Meaning that this downtrend would end / set a swing low on the WE 3/7/22 along with the probability that FRO could likely set a swing high in the middle of that range on the WE 2/22/21.
Let me know what you think below!
If you enjoy my content, please 'like' and 'subscribe' for more!
Thank you.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.