Coal Stocks Struggle To Catch A Spark
Nicholas Santiago | Apr 24, 2013 12:39AM ET
One of the weakest sectors in the stock market has been the coal stocks. This important industry group has been declining since April 2011. At that time, the Market Vectors Coal ETF (KOL) traded as high as $51.87 a share. Yesterday, the highly followed KOL is trading lower by 0.11 cents to $21.08 a share. KOL has declined by nearly 60.0 percent from its 2011 top. Short term traders must still recognize that this sector is still in a severe down trend on the charts. KOL will have some daily chart support around the $20.00 level. Short term day traders can watch for intra-day support around the $20.95 level.
Many traders and investors are looking for a bottom in this sector. This has been very difficult, as many of the leading coal stocks continue to make new lows on a daily basis. Please understand, this sector is very oversold and short covering bounces will occur from time to time. This sector is very unfavorable due to the current domestic energy policies and a weakening Chinese economy. Demand for coal and coal products has certainly declined recently.
Some leading coal stocks that most traders and investors follow include Peabody Energy Corporation (BTU), Arch Coal Inc (ACI), Alpha Natural Resources Inc (ANR), and Walter Energy Inc (WLT). All of these leading coal stocks remain in a downtrend at this time.
Sometimes, when stock sectors decline so sharply, it is better to wait for a confirmed reversal before trying to pick the low in the industry group.
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