Whenever the word “Coal” comes up in conversation, a reaction of
disgust has become the standard. The reasons range from, “It’s dirty”
to, “We don’t need it” to, “Obama” (whatever that means)…..But I don’t
know anyone who likes this space. Not a single person in fact. I bet I
probably grossed some people out with this headline alone.
So as we like to do around here, when no one likes them it’s probably
time to look a little bit closer. We’ll focus our attention today on
shares of the Market Vectors Coal ETF
$KOL. The first thing that stands out to me is the beautiful 5-wave pattern from the 2011 highs down to last year’s lows:
The next thing that sticks out to me is the potential double bottom
formation down here near 17.25. This is a weekly candlestick chart. Look
how on the second low last month, momentum (measured using a 14-period
RSI) was putting in a much higher low. That bullish divergence stands
out after a 5-wave decline.
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