Hanwha Ocean shares dropped 23% Monday after Canada picked Germany's Thyssenkrupp Marine Systems to build its submarine fleet. The South Korean shipbuilder apparently thought it had a shot. It did not.
Prime Minister Mark Carney made the announcement. Hanwha Ocean executives watched their market cap evaporate faster than a retail trader's confidence during earnings season. Somewhere in Seoul, a boardroom full of very serious men in very expensive suits stared at a PowerPoint presentation titled "Plan B" that contained no slides.
The technical setup was bearish going into the announcement. Still is. Turns out losing a multi-billion dollar defense contract does not trigger a bullish reversal pattern. The chart now looks like a submarine. Sinking. Without a propulsion system. Because Hanwha Ocean did not get to build one.
Retail traders who bought the rumor got to sell the news at a 23% discount. A generous offer. Canada apparently preferred German engineering over Korean shipbuilding. Shocking development in the world of military procurement where reputation and political relationships matter more than whatever story you told yourself about momentum indicators.
Thyssenkrupp Marine Systems will deliver the submarines. Hanwha Ocean will deliver quarterly earnings calls explaining why this loss was actually part of a broader strategic pivot. Analysts will nod. The stock will trade sideways for six months. Then everyone will forget this happened except the guy who bought 500 shares at the top because his cousin works in maritime logistics and said it was a lock.
The moving averages all crossed to the downside. The RSI cratered. The MACD formed what technical analysts call a "you're f*cked" pattern. None of this mattered before the announcement and it matters even less now. But sure, draw some more trendlines. Maybe Canada will reconsider.
Photo by on Unsplash
Leave a Comment