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July 22, 2012 / redman59

Down, Down, Down in the Ground – $KOL

While driving down the road in my 2001 Honda Civic and listening to the Dropkick Murphys (song in video below), an ETF popped in my head that made me want to look to see how it was doing. Before you laugh at what I was driving, understand that my situation during the purchase was different than now and also I am one of those guys that doesn’t fix what’s not broken. So I will upgrade to a truck that I’ve been wanting when my car doesn’t run anymore. No sense in spending money on something I don’t have to.

Coal has been getting crushed with traders looking for that bottom. When looking at the coal industry I turn to the ETF $KOL. When looking at ETF’s I always make sure to read what their Fact Sheet as the inverse, leveraged, and volatility ETF’s have nuances that are not for buying and holding. The box below provides bullet points for the description of $KOL (Google Finance):

  • Replicate as closely as possible the price and yield return performance of the Stowe Coal Index (COAL or the Index)
  • The Stowe Coal Index comprises a globally diversified group of global coal companies, including those engaged in coal transport, equipment manufacturing, and the production of clean coal
  • The Index provides exposure to publicly traded companies worldwide that derive:
    • derive greater than 50% of their revenues from the coal industry
    • market cap exceeding $200 million
    • three-month average daily turnover greater than $1 million

I have uploaded Weekly charts of the US stocks that are holdings within $KOL into FinViz; severe damage in the last 15 months.

With those charts aside below is a Weekly chart that goes back to the creation of $KOL, with notes provided. With that one can see the technical damage that has been done and even if we see a nice rally of more than 30%, we run into heavy resistance and this looks to be a better shorting/selling opportunity rather than adding shares. Until we clear that level I have no interest in getting excited about the future of coal.

Dropkick Murphys – Tribute to miners with Buried Alive

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