Are coal stocks about to heat up?
President Trump will be talking about coal on Tuesday and if there is some positive vibe there could be a temporarily bump in the commodity. In turn, the small group of coal stocks may get a bid through some price resistance.
However, overall, the trend is still down for this beaten-down group.
While you may think the low is in, that could have been said for months, as the group (look to the VanEck Vectors Coal ETF (KOL) ) has made lower highs and lower lows.
That is a downtrend, my friends. And lest you think you can catch a falling knife, that is a tactic I completely disregard.
Going back some years, the coal group was slaughtered during a time of heavy regulation and shift to alternative sources of energy. As a result, a slew of bankruptcies hit, and only a few survived after reorganizing.
One of the survivors is St. Louis-based Arch Coal (ARCH) , which actually has a decent technical setup. Nevertheless, we would step back here as many of the initiatives started by the president have eventually resulted in a "pop and drop."
The tariffs are a big issue with commodity companies, and coal is no question in the eye of the storm.
We would take a wait and see approach with this group before moving to get long, as policy directives may not be as positive as those would hope.
