Don't Ignore This Chart!

Coal Facing Poor Technical Conditions And Historical Headwinds


The Dow Jones U.S. Coal Index ($DJUSCL) spent 2016 bouncing from the ashes after a disastrous 2015 in which the DJUSCL lost 90% of its value.  The "dead cat bounce" looks as though it may have ended as price action has rolled over and the weekly MACD has clearly turned bearish.  Here is the current technical view:

The strength ended in December 2016 with the printing of a negative divergence.  That slowing upside momentum reversed into a downtrend where 20 week EMA resistance has been problematic for the bulls in both April and May.  If the DJUSCL is to reverse course and re-establish its prior uptrend this summer, it'll have to do so against the historical norm.  June and July are easily the two worst calendar months in terms of DJUSCL performance.  Take a look:

The above shows that coal has averaged dropping 3.6% and 5.2% during the months of June and July, respectively, over the past 17 years.  History is not kind to the bulls and, currently, neither are technical conditions.

Happy trading!


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Tom Bowley
About the author: co-founded Invested Central in 2004 and served as the site's Chief Market Strategist for more than 10 years. Invested Central provides stock market education and guidance for those interested in making their own financial decisions. During his tenure at Invested Central, Tom co-hosted Market Open LIVE, a national radio broadcast that covered many of the largest markets across the U.S. In addition, he has spoken at various conferences throughout the United States and Canada and has taught thousands of traders across the globe how to trade equities more wisely with an emphasis on managing risk and intermarket relationships. Learn More
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