Thursday, 22 May 2014

BTU - still no love for the coal miners

Whilst the broader market continued to push higher, there was significant weakness in the coal mining sector. Peabody Energy (BTU) closed lower by -3.1%, @ $17.49. There is easy downside to the low $15s, but if the main market breaks this summer, then perhaps even lower.

BTU, daily

BTU, monthly


*all upside targets on the monthly chart are currently on hold.

I will again first note, I am bullish on ALL miners in the long term, but for now...perhaps across into 2015, the coal, gold, silver, copper, miners are generally still exceptionally weak. A break below the 2013 lows seems viable for most mining stocks (inc. GDX, <$20), this year.

Peabody...not going away

BTU is a great company, and I've zero concern about whether it will still be trading in the years ahead.

What remains a problem is the very strong anti-coal stance from the US leadership, there remains a lack of any respect for what is one of the few viable long term energy resources.

However, world coal demand remains relatively strong, and at some point, the mining sector will start to benefit from increased margins.

In contrast, I remain VERY wary of Arch coal (ACI) and Walter Energy (WLT). Both look vulnerable to imploding entirely within the next 6-18 months. I'd not be surprised if both don't file for bankruptcy, just as JRCC and PCX have.