KOL Coal Sector ETF Weekly Chart Downward-Sloping Channel Inverted H&S

The coal ETF is cleverly named KOL just as many other ETF's are cute with names such as FAN for wind and TAN for solar. Coal has been beaten like a rented mule. Note the top in coal in 2011 identified with the red rising wedge and negative divergence. The pink head and shoulders (H&S) also formed and once the neckline at 43 gave way, it was over, or 'ovah' as they say in Brooklyn.  A head at 53-ish, neck at 43-ish, targets 33-ish which was easily achieved.  Coal tumbles lower thru the downward-sloping channel producing lower lows and lower highs. Very ugly chart; each day coal is beaten to a pulp. President Obama's dislike for the coal industry has performed extensive damage to this vital energy sector.

But, the future is much brighter than the past year.  Price produced a falling wedge and positive divergence, along with the oversold conditions, that launched KOL off the bottom. The indicators show a long and strong profile moving forward. In addition, KOL now exhibits an inverted H&S with head at 22-ish, neckline at 27-ish, so the upside target would be 32-ish should price move up thru the neckline.  The daily chart shows the inverted H&S much more clearly as well as gaps left behind when price came off the bottom, therefore, a move down to 22.5-ish to fill the gap must be considered.  Overall, the projection for coal is very positive moving forward and KOL is set up bullishly. Even in a large market melt-down, coal would be one sector that has already received a severe punishment so it would not have as far to fall.  If the president is reelected, weakness will reappear in coal. If Romney is elected, coal will catapult strongly higher. In the shorter time frame before the election, September-October, KOL could easily work up to the 30+ area, and then the story would be written once the new U.S. leader is decided on 11/6/12. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.