Exchange traded funds that invest in coal-related stocks are down so far this year but may be due for a bounce at the bottom of their 2011 trading ranges.
Market Vectors Coal ETF (NYSEArca: KOL) is off more than 10% so far this year. Some companies such as America Electric Power (NYSE: AEP) are closing down coal plants to comply with EPA regulations.
The tracking index is made up of the largest and most liquid companies involved in the exploration for, and mining of coal, as well as other related activities in the coal industry, according to its manager.
Technically, the coal ETF has corrected from its April 2011 high but remains in a long-term uptrend, according to analysts at East Shore Partners.
They said support exists between $41 and $42 a share, which would be an ideal entry point.
Market Vectors Coal ETF was up nearly 3% to $46.50 in afternoon trading Tuesday.
East Shore said money flow in the ETF has been declining since late 2010 and momentum has become negative. A confirmed break below support “would be very bearish” and indicate a test of $30 a share is possible, they added. [Coal ETFs to Consider Following International Coal Deal]
PowerShares Global Coal Portfolio (NasdaqGM: PKOL) is another sector ETF option.
Market Vectors Coal ETF
Tisha Guerrero contributed to this article.