Is Star Bulk Carriers Too Hot to Handle Today? (SBLK)

I'll warn you now that if you're a fan or shareholder of Star Bulk Carriers Corp. (NASDAQ:SBLK), then you're not going to like what you're about to read. Before you fly off into a tirade of "colorful" descriptions of me, however, know that this is neither a judgment call on the company itself, nor a long-term outlook. It's simply a trading-based observation of hints that SBLK has dropped today. Fair enough? OK, let's dig in.

If you were lucky enough to be in a SBLK position before today, then congratulations - you're now up at least 10% since mid-July. And, if you were in a position as of mid-July, then you're easily up 40%, if not more. No matter when you got into your Star Bulk Carriers position though, it's time to get out.

Too many of the tell-tale signs are already in place, like the shape of today' bar (so far). If Star Bulk Carriers Corp. shares were to stop trading right now, we'd have formed what's called a gravestone doji where the open and close are both right around the low of a very tall daily bar. The gravestone shape suggests a transition from a net-buying to a net-selling environment, all within in session.

The opening gap from this morning is working against SBLK too. Generally speaking, the market doesn't like to leave open gaps, meaning we're likely to see at least enough bearish pressure put on the stock here to fill in the gap left by Monday's high of $7.38 and today's low of $7.73. Problem is, if Star Bulk Carriers Corp. actually pulls back to $7.38, the sheer size of that stumble could spook traders into even more selling, and drive the stock all the way back to the $6.20-ish area before finding a floor.

Finally, the third clue that SBLK is topping out today is the sheer volume behind the big rally. Though we've not yet hit the peak volume from July 12th today, we're on pace to do so.

Volume spikes tend to accompany pivots for charts, turning downtrends into uptrends, and uptrends into downtrends. The volume surge is something of a flushout of the last of a trend's participants. In this case, it means the 'last hurrah' for the Star Bulk Carriers Corp. rally, and the transition into a pullback.

Again - and I can't stress this enough - this isn't a long-term call on the company. Star Bulk Carriers is a fine company, and the bullish jolt we've seen unfurl over the last two months is a solid long-term bullish clue. Now, however, is the worst time to jump on board. Wait for a revisit to the $6.00 before wading in.

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