Among the hot streaking names over the trailing year, Castor Maritime (NASDAQ:CTRM) stands out for its incredible performance. Right before the new year, you could have bought CTRM stock for under $2.
But you had to act quickly because within days, shares would jump decisively into $3 territory and from there, almost instantaneously to double-digit range.
In the original publication date of my coverage of CTRM stock for Benzinga, I mentioned that contrarian belief toward an economic recovery and the collective power of the internet could lift shares higher. As Castor Maritime’s price chart shows, CTRM stock became the toast of town for speculators. Naturally, this emboldened others to join in on the fun, which unfortunately led to a bad case of bag-holding.
Still, I suspect that under the notion that you don’t take losses until you cash them in, many on social media decided to go in for a second round. From early March, this contrarian tactic briefly yielded positive results until the bottom fell out.
Currently, CTRM stock appears mired in a decidedly bearish trend channel. Nevertheless, the bulls are not giving up hope and this time, they have some justification for their optimism.
As InvestorPlace assistant news writer Brenden Rearick noted, CTRM stock jumped higher following its earnings release for the first quarter of 2021. As he put it, Castor flexed “its first profitable quarter in the last five quarters. Particularly, the company saw a $1.1 million profit in the first quarter of the year, good for a 467% year-over-year gain.”
Moreover, Castor CEO Petros Panagiotidis felt buoyed by what he termed a “transformational period” for the company. Specifically, he anticipates “ongoing strong demand for dry bulk transportation services” and a “potential future recovery in the tanker market.”
Unfortunately, I’m not seeing it.
CTRM Stock May Be Due for a Long Winter
Typically, I enjoy writing about cult favorites like CTRM stock like I imagine a draftee would feel getting called up to fight a foreign war he never signed up for. I guess you got to do what you got to do.
Aside from the nonsense that fills up my inbox, stocks like Castor Maritime attract the you-forgot-this trolls. It never fails to amaze me that some folks don’t understand that articles of this nature are not meant to be a comprehensive exegesis of a particular company. Frankly, if you want an exegesis of CTRM stock or any other investment, you’ve got to pay for it.
Fortunately, with technical analysis, you don’t have to worry about performing an exegesis on an exegetical analysis. The theory of this methodology states that the equities market takes into consideration everything that’s going on with a stock. Thus, I find the sequence of trades on April Fool’s Day of this year and subsequent sessions deeply problematic.
From Jan. 28 through April 1, you can make the argument that CTRM stock was forming a bullish pennant formation, with the sharp rise from New Year’s Day providing the flagpole structure. But the April 5 session saw a gap-down session and since then, CTRM never regained positive (and sustained) momentum.
Of course, it’s possible that shares could make a massive comeback from here. But a bullish pattern turning into negative price action is a very bad sign. Therefore, you need incredibly positive fundamentals to convince onlookers to take a shot.
Like I said earlier, I’m not seeing it. For instance, while the May 2021 jobs report was decent, the employment level is still down 4.5% from pre-pandemic levels. Further, employment level growth is now extremely muted. From April to October 2020, this metric jumped 12.2%. But from October to May, the improvement is only 1.3%.
Likely, global commerce won’t improve dramatically until the U.S. does.
An Inconvenient Truth
Another problem about writing for an internet audience is that there are two types of facts: factual facts and facts of convenience. The latter category may not align with a particular group’s or even individual person’s beliefs so it’s wrong. I believe this is the danger of banking on social media for your due diligence.
But here’s the factual fact that’s inconvenient to CTRM stock. As it stands now, we are structurally suffering from deflation, not inflation. And deflation is typically not great for shipping businesses because of the lack of demand.
You might immediately think that I need to get involved in the shipping business, as in ship my hind end out of here. But look at the facts. In the first quarter of the year, U.S. GDP was up 2.3% year-over-year to $22 trillion. But the employment level is down 4.6% over the same frame.
Higher output over a lower worker base is deflationary. If we lived in inflationary circumstances, we should see higher output from a higher worker base.
Thus, with consumer dollars concentrated in fewer hands, that’s not a great recipe for a business that depends on the shipment of goods that eventually find their way into consumer products and services. Ultimately, I’ll be watching CTRM stock from the sidelines but as always, feel free to do what you want.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.