Thursday, May 14, 2009

Old King KOL...

... was a merry old soul, and a merry old soul was he.

Commodity ETF's serve as effective vehicles for equities traders to gain exposure to the commodities market. Overall commodities have exhibited relative strength vs. the broader market over the past few weeks

A few days back we highlighted the UNG ETF, which tracks Natural Gas. Let's continue our commodities discussion by highlighting coal. KOL, the Market Vectors Coal ETF is structured to:
"...replicate as closely as possible, before fees and expenses, the price and yield performance of the Stowe Coal IndexSM. The Index provides exposure to publicly traded companies worldwide that derive greater than 50% of their revenues from the coal industry"

The Stowe Coal Index is comprised of 32 coal stocks. Some of the bigger players (and index weightings) within the index are:
JOYG - Joy Global Inc (6.5%)
CNX - Consol Energy Inc (6.27%)
BTU - Peabody Energy Corp (5.73%)
BUCY - Bucyrus International Inc (4.55%)
MEE - Massey Energy Co (4.48%)
ANR - Alpha Natural Resources (3.5%)

Weekly Chart KOL:
1. Along with other commodities (Oil, Nat Gas, etc...), KOL experienced a precipitous downtrend starting in July 2008- The bears (supply) were in complete control
2. Starting in November there began to be an equilibrium between supply & demand as the stock transitioned into more of a sideways consolidation.
3. May's breakout suggests that the Weekly chart may be transitioning into an uptrend.

Daily Chart KOL:
Strong volume helps to confirm the validity of the breakout.

So if you're looking for bullish stocks, the coal sector may not be a bad place to start.


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