Fog Warning For Cloud Peak Energy (CLD)

Posted by barkand on January 24, 2012 under Commodities | Be the First to Comment

Coal miner Cloud Peak Energy (CLD) presents us with a glass-half-full or glass-half-empty situation. Some optimists out there might feel that CLD is in the process of basing, as price volatility quiets down. But we do not see it that way.

We see a stock where the bulls have been steadily losing their enthusiasm. Starting with the lows formed along with the overall market in early October, there have been four attempts at rallying the troops. And each one ends with less progress made in terms of prices. To take a more bullish view, we would want to at least see better volume on the up thrusts. But in fact volume picked up only after the fourth and most feeble rally attempt.

In each of the last two trading days, prices reached $19.75 early in the day. But the bulls quickly retreated. Clearly, they are not in control here. Indeed, CLD has been underperforming the Market Vectors coal ETF (KOL) for the last month and we expect that trend to continue.