10 Key Price Points In Play for KOL Shares

The breakout 2016 rally in the VanEck Vectors Coal ETF peaked just shy of triple the January low

Feb 20, 2017 at 8:00 AM
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After rallying 96% over the course of 2016, and having now gained 162% from its January 2016 intraday low of $5.07, the VanEck Vectors Coal ETF (KOL) enters the week at a very interesting juncture on the charts. KOL finished Friday at $13.29, sandwiched between rising support at its 20-week moving average and recent resistance from the $13.50 level. And -- following a post-election period of sideways price action that has now seen the fund's 120-day historical volatility drop to a near-annual low of 21.5% -- those are just two of the notable price points in KOL's immediate vicinity, viz.:

  • $15.21 = triple the January 2016 low
  • $14.74 = Nov. 9 high (and current 52-week high)
  • $14.04 = 200-week moving average (capped the Nov. 9 post-election high)
  • $13.53 = Nov. 8 closing price (last daily close before Nov. 9 election-related spike)
  • $13.48 = +10% year-to-date return
  • $13.27 = 10% pullback from Nov. 9 annual high
  • $12.96 = 20-week moving average (resistance back in 2Q 2015, but reliable support since December)
  • $12.93 = 100-day moving average (helped buffer KOL's December pullback)
  • $12.92 = 50-day moving average (most recently a layer of support)
  • $12.84 = +100% year-over-year return (as of Friday's close)

And the prospect of looming resistance just overhead isn't the only headwind facing KOL. From a fundamental perspective, the coal-based ETF appears to have been hit with some "sell on the news" activity following the early November U.S. presidential election. In calendar year 2016, per etf.com, KOL netted inflows of 26.92 million through Election Day on Nov. 8 -- but from Nov. 9 through year-end, the fund registered outflows of nearly 5 million. And through last Friday, KOL's post-election outflows had increased to 8.86 million.

What's interesting to note, though, is that KOL's Relative Momentum Index (RMI) peaked at a fairly astronomical 94.85 right around the time of the fund's November peak -- not only the highest RMI reading of KOL's stellar 2016 uptrend, but also the indicator's highest reading on record. Previous RMI readings around 90 or above have often, but not always, marked major peaks for KOL; however, the RMI has since tumbled all the way back below 30 and recovered to 63.92, as of Friday's close.

While KOL may remain, in the near term, at the mercy of whatever energy-related policies may emerge from the White House, we'd suggest that traders eyeing the fund for a potential buying opportunity would do well to act on an RMI move back above 70, which has been a fairly reliable indicator of additional upside in the recent past. And given that the 2016 rally died just shy of triple the January low, a breakout that carries KOL above the reasonably expected resistance in this area could become quite explosive indeed.

kol daily chart 0217

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