Coal Stocks Firing Up
Source: Barron's, Michael Kahn (3/28/11)
"Technical conditions in coal sector reveal outlook remains bullish."
Coal stocks, represented by the Market Vectors Coal ETF (KOL), an exchange traded fund comprised of coal mining and equipment companies, have been in a bull trend for more than two years. After a volatile correction early last year, the ETF has been wearing its rally cap since May (see chart).
Last week, many of its component stocks reached fresh new highs and levels not seen for nearly two and one half years.
The sector was stoked after news of the damage to the Japanese nuclear reactor. On March 16, several days after the disaster, the buying surge was huge in terms of both price and volume. That was a technical positive.
The price of coal is benefiting from energy users who are seeking freedom from high oil prices. Based on the technical conditions in the sector, the outlook remains bullish.