Coal continues to make bulls miserable, despite a good day today thus far. Natty gas is joining the crowd, but coal leads the way. This group has been volatile, to say the least.
Arch Coal (ACI) recently saw a big squeeze in price as the company worked on its debt. That move higher has all been erased as the stock went from $1, briefly broke $10 (yes, TEN) and is now back below $2.
A similar pattern can be seen in Peabody Energy (BTU). Split adjusted the stock range from $17 to $40 and now sits back in the $17s. This $17 level is now a triple bottom. I know. I know. Triple bottoms don't exist, so I'll just call it a multiple bottom.
But no matter what we call it, there is something to take from this. If the stock were to see a close under yesterday's lows, then I believe BTU is set to test the 52-week low at $14.85, if not lower.
The long-term moving average convergence divergence (MACD) is crossing over bearish again, which has been a very negative sign for bulls. The Relative Strength Index (RSI) is bearish again, but not yet oversold. A push back over 50 on the RSI would be a huge positive for bulls, so it is worth keeping an eye upon.
A buy trigger there could push this back to $21-22 quickly. The Chaikan Oscillator is threatening a new low here, weighing further on price. Overall, there are some things buyers can watch here, but the setup favors the bears, with a target of $15 on the downside should we see a close under yesterday's lows.
We can save time on the weekly view. Rather than posting a chart, all you have to do is simply grab a blank sheet of paper and put your writing utensil in the upper left corner. Next, draw a straight line connecting the upper left corner of the paper with the lower right. Now you have a rough version of the weekly chart of BTU and just about any other coal stock out there.
