Coal Stocks

[aavazaawjos]

Speaking of fertilizer implosions,check out the charts of MEE,PCX...

Look how these pigs got hyped into a mania rush as coal would be a cheaper alt to oil.This was an indicator that the last party train had left the station.

Coal piggybacked oil at the last phase of oils mania.Coal mania suddenly started from nothing in April and oil peaked in July.Coal maintained its stratosphere price til august.Now its back to april prices.

Amazing!!!!

PCX from 14 to 92 back to 20.In 5 months!

[aaltoippp]

For those with the risk appetite to tolerate it coal stocks are getting pounded. With the headwinds of slowing GDP growth in India and China, the latter which is the world's largest coal consumer, decades' low prices for cheap natural gas as an alternative fuel source for electricity generation, as well as Barack's EPA set out to put coal companies out of business I would not be a buyer of coal firms with weak income statements/balance sheets.

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With that being said, the nature of the commodities business is a cyclical one and I have little doubt there will be a day when these stocks bounce back. The question is when. The following are just a few of the more prominant names in the business. Peabody is the world's largest publicly traded coal company and is therefore not likely to be going out of business any time soon. Consol Energy also has exposure to natural gas relieving some of the sting felt there. The others are names to add to the watch list with Patriot, the spinoff of Peabody's eastern operations, being probably the most speculative of the stocks listed here.

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A couple reasons to add coal to the watchlist.

There's some divergence in the price and the RSI(14). Smaller candles that border on the likeness of dojis suggest volatility has subsided for the time being. And the ADX cresting above the DMI implies that the peak in trend may be upon us.

Proceed with caution as this is a highly cyclical industry and one the current Administration is hellbent on stamping out but there are a few glimmers of hope in the price action for those with the risk appetite for bottom fishing.

[9dRWFpl2Yf]

The following are a few interesting ways to play the coal space if the industry is on your radar.

Coal MLPs lilke Alliance Resource Partners [ARLP], Alliance holdings [AHGP], Natural Resource Partners [NRP], and Penn Virginia Partners [PVR] could be a way to get paid to sit and wait for a change in administration at the White House which would invariably bring a change in attitude toward coal at the EPA. I suspect the short run outperformance of a few of these names has less to do with the health of the coal industry and more to do with fixed income investors being starved for yield and switching over to MLPs in this ultra-low yield environment.