This weekend everyone was excited over the coal stocks.  The charts finally turned and started to improve:  ACI, CLD and a chart-fest at FINVIZ.  Got Coal? When “Less Bad” Starts To Work at Upsidetrader garnered a lot of attention.  I was told Dan Fitzpatrick is high on coal.  Am I too cautious in my patience?

First, note the S&P 500 closed last week above 1400, with the cyclicals actually leading (Alhambra).  Conversely, denial in the commodity sector?  Market Anthropology

The ISA thesis continues to be to wait on natural gas.  Looks like “U.S. natural gas prices must average in the $2.50 to $3.00 range”  through shoulder season at Raymond James.  Well productivity, associated gas production and the well-count backlog continue to keep natural gas supply high.  Look for a turn later this year in the best natty supply read you will find: RBN Energy.

Until natural gas normalizes:  “We are moving into an environment where coal-fired power plants are only partially base loaded and many are only loaded in an intermediate and peaking basis.”  SNL

Long term, ISA is in the super-cycle camp too.  Japan is energy short (Washington Post).  But not right now.  Sinking coal prices force major job cuts in Australia at Mining.

US thermal coal is the play, not coking coal.  The China slowdown needs to end to turn around steel production (WSJ).  This Motley Fool essay unintentionally shows Alpha Natural (ANR) to be in big trouble if met coal holds steady or heads lower.

In the second quarter James River (JRCC) slashed capex to $5 million more than operating cash flow, and it was spun as positive (Barron’s).  Ignored was interest expense being at over half cashflow alone.  Who are they kidding?  When the thermal market does turn, the capital starved players will lose out to the strong.