We all know by now that the coals have been in devastating downtrends on virtually all timeframes for a while. Looking at the sector ETF chart, below, you can see the very high volume yesterday with a mild intraday upside price reversal (denoted by the “shadow” on the bottom of yesterday’s daily chart candlestick).
It is not a textbook “hammer” reversal candle, since the “body” is a bit too large. What that means is buyers should have more forcefully made the reversal with a close at the highs. Nonetheless, today’s inside day and muted reaction to the President’s speech compels us to consider whether sellers are exhausted in the sector for now.
I would become more convinced with a strong move up through $18 this week, which would make progress in confirming the recent high volume has been capitulatory. These are all still unhealthy charts and will take months to fully repair, which means taking a pass on the trade altogether is fine. If you are looking for action, consider ANR BTU CLF CNX WLT YZC.
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EPA is preparing regs that hammer coal-fired power plants.
EPA rules are a problem for US coal use. But the bigger problem, right now, IMO, is global oversupply.