Coal Still Stinks!

For the past brazillion weeks as I have looked through charts on Saturday, my first comment has been that Coal still sucks. Allow me to elaborate.

The weekly chart for the Market Vectors Coal ETF, KOL, below shows a downtrend beginning a year ago, August 2011. The Relative Strength Index (RSI) is bearish and technically oversold, but not extreme. The Moving Average Convergence Divergence indicator (MACD) is negative and about to glance off the zero line , heading back lower. Both of these indicators support more downside.

The price action does not look to be letting up either. After a brief stall at the 61.8% retracement of the move higher from 2009 through to early 2011, at 25.20 it is now resuming the move lower. All of the Simple Moving Averages (SMA) are rolling lower and are above the price. There is no question that the trend is lower.

One more interesting point in the chart is the huge volume spike the week of June 25th. With 4x the normal volume on a buy candle, the price spiked up almost 7% but could hold above that 61.8% Fibonacci, and fell back immediately the following week. Four times the volume buying did nothing.


I know that many traders are looking for a bottom in Coal and some are playing it on the long side. You just may win doing so as well. If you do more power to you, but don’t fool yourself into thinking you have bought at the bottom and a reversal is happening. Any long trade is counter trend and should be managed tightly just like a short trade in an uptrending market. In conclusion, Coal Still Sucks!

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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