Don't Ignore This Chart!

Coal Facing Poor Technical Conditions And Historical Headwinds

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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!

Tom

Tom Bowley
About the author: is the Chief Market Strategist of EarningsBeats.com, a company providing a research and educational platform for both investment professionals and individual investors. Tom writes a comprehensive Daily Market Report (DMR), providing guidance to EB.com members every day that the stock market is open. Tom has contributed technical expertise here at StockCharts.com since 2006 and has a fundamental background in public accounting as well, blending a unique skill set to approach the U.S. stock market. Learn More
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