...ending the week close to its lows, falling after a mixed jobs report weighed on sentiment (the report leaves many questions – causing uncertainty over whether the Federal Reserve will raise interest rates in two weeks). China was a non-factor the last two-days amid its holiday, though other emerging markets continue to unravel. All 10 S&P sectors were lower, led by weakness in Discretionary, Industrials, Healthcare, and Technology, while Financials fell the least. The Dow was down 348 points at session low in a week that saw big swings in stocks, and commodities (oil closed the week higher). The S&P 500 posted its sixth decline exceeding 1% in 12 days (prior to that there’d been 10 such declines since January).

Coal - Can the Republicans bring it back from the dead?

Most coal related stocks have not had the best of times the past few years! ACI,BTU, CLF (just to mention a few) are down over 85% from their highs.

The mid-term elections last week have stirred up some thoughts that the Republican party can bring coal back to life. 

The above 2-pack reflects the price of Coal (left chart) and the Coal ETF (KOL). I believe the price point for KOL is very important, as it is testing the underside of channel support as resistance, for the first time. 

Some of the coal names above have had some very volatile days over the past few weeks, as it appears this sector might have a few traders interested in nibbling at depressed levels. 

Knowing what the Republicans can or will do with this industry is well above my pay grade! Humbly, I do feel what KOL does at this resistance point could give us some sense of where the Coal industry is going in the near future!

US’ Political Greenwashing May Boost This Coal Stock

In an AP article this morning titled “Not in my backyard: US sending dirty coal abroad”, Dina Cappiello makes the case that in the past six years US energy companies have exported more coal to other parts of the world than ever before. For someone who is concerned about global warming, it doesn’t sit well with me to see the US talk about winning the war on carbon in political circles yet actually kick the coal can down the road for the rest of the world to deal with. That means we are essentially offsetting lower coal usage and greater use of renewables right here in the US, with an increased amount of carbon pollution in other parts of the world thanks to our higher coal exports.

As energy strategist its getting harder and harder to overlook how the US is increasingly satisfying growing global demand for cheap coal. That has me inclined to to believe the recent selloff in shares of Arch Coal ($ACI) ahead of Q214 earnings tomorrow may be a solid buying opportunity. Shares of ACI are at a fourteen-year low and are worth a shot from the long side especially with China, India, Germany and even Japan tapping more coal. 

Also, according to a July 2014 Short-Term Energy Outlook from the Energy Information Administration (EIA), the US has been using cheaper coal to offset rising natural gas prices. Therefore ACI can be a contrarian long idea ahead of earnings considering their coal helps power 37 out of 48 continental US states and prices in the Western US region, where they have significant operations, have improved.