#MarketTiming – To short the usual suspects…

The general market has had a dandy little bounce the last two days and may continue to the upside into the holiday weekend.

But sometimes in the endless quest to detect “what happens next” it is not what is happening, but instead it is what is not happening.

Since most stocks in most sectors rally with a rising mass market those that don’t usually get hit the hardest with the market turns.

Since I think all of the market’s rallies now are bounces to be sold until the biggest reward comes when the realization sets in that there is nothing supporting this supposed bull market except the fumes in the Fed’s liquidity tank, I’ve taken a look around to what is not bouncing.

Really took just a glance around.

Didn’t have to look much past the usual suspects, the airlines, cruise ships, theater chains, and coal. Those first three sectors are severely distressed by the pandemic in this the worst of times. Coal is always a short even in the best of times.

Take a look at the two-day charts below to see the lack of bounce these last two days in all of these stocks.

AIRLINES — AAL, ALK, DAL, LUV, UAL, and most importantly, BA. Hope springs eternal in this sector but it does not fly. ALK has canceled 130 flights so far and mothballed 30 airliners. AAL and UAL, in desperation, have said they will fill their flights to capacity while others have said they have eliminated middle seating in an attempt to social distance, but it is doubtful the hordes of passengers they packed in previous to the pandemic will return any time soon. They are going to lose money, maybe on every flight. BA rallied yesterday on news of 737 MAX re-certification tests as if anyone is going to want to order that plane anytime soon, especially since most airlines are in the process of canceling orders (Norwegian Airlines canceled 97 orders today).

CRUISE LINES – CCL, RCL, NCLH. What’s there to say further? Can cheaply offered luxury cancel the memories of being trapped on cruises of contagion and death while the charlatan President of the United States, no less, says he would rather have passengers die there than muck up his Coronavirus positive case counts on shore? And what’s it going to cost to hire crew members for those voyages, if any crew can be hired at all?

THEATER CHAINS – AMC, CNK (which now owns Regal, the largest chain in the US). These movie theaters have a chance to make adjustment to cope with social distancing but still…even for the biggest blockbuster offering it will be irresponsible to operate at more than 50% capacity (if not illegal in some states). How much profit margin is there in half a house?

COAL STOCKS – BTU, ARCH, SXC, CNX. Coal, no matter how many times Trump says he loves it, has no sustainable future. Just compare the stocks in the sector to the solar stocks. On the next leg down, it looks as if BTU particularly may once again wipe out shareholder equity with yet another bankruptcy filing.

It’s going to take some market timing to pick the entries for when these stocks break down again. For me that’s watching what NYMO and NYSI, as my prime measures of mass-market psychology, are doing, but I assume anyone capable to shorting has their own indicators to rely on.

Regardless, when the time comes, I’m looking to take the slide down in what has now become the USA’s continued botched-coronavirus-response carnival.

(click on the chart for a larger view)

#STOCKS – “Trump loves coal…”

The President claims he loves coal and coal miners.

Outside of Florida, he runs most often to West Virginia to rally his supporters.

Evidently, the West Virginia voters have been so poor and uneducated for so long, they will believe anything his says. I’m probably being too harsh on these unfortunate folks but it’s way past time they wised up. To have Trump on your side is to have worse than having no one.

Except for his Russian money-laundering real-estate businesses, this self-described master deal maker and businessman has managed to run through everything he inherited from his dad and a few billion more, bankrupting almost everything he’s touched along the way – casinos, steaks, champagne, a university, and so and so on (to say nothing of his marriages and his money spent to shut up porn stars and playmates).

Without the Russians, he could be going broke right now hawking hot dogs from a cart on a street corner in New York.

But enough of my admiration for greatest con man of all time, let’s get down to the stock market and the coal stocks.

While Trump says he loves coal, as anyone who has bumped into my posts on Trader-Talk over the years knows, there may be no one who loves shorting coal stocks more than me.

I’ve shorted Walter Energy (WLT) off the board. That was a lot of fun as nearly every coal sector analyst kept reiterating “buys” at every price level from $85 a share to $1.50. At $1.50, the analysts finally said sell. Believe it! Hopefully all those fools (or are they liars and thieves?) are out of the securities industry but probably not (Trump is President, after all, no matter what).

Over the years, so many coal companies have gone belly-up, killed by natural gas, environmental activists, and finally the worldwide recognition of climate change, it was almost as if one could throw darts at the sector and whatever the dart hit would die.

Two of the most prominent were Peabody Energy (BTU), “the biggest coal company in the world,” and Arch Coal (ARCH).

Both companies, BTU and ARCH (and also the not-great Cloud Peak Energy), came to the port town where I live in a desperate attempt to ship coal to China where my neighbors, along with everyone on the West Coast, shut them down, a failure that led to both companies filing for bankruptcy and its consequent loss of all shareholder equity. They both reorganized, returned to the big board, and long came Trump to sit down beside them and give them hope…for about a year. Even subsidy plums can’t save a dying fruit tree.

Both companies are now well on their way to burning through all shareholder equity again. I can’t imagine who squanders investments on this dead-end stuff anymore.

See the pitiful charts below. Both stocks, like the market, are so oversold they will probably a bounce here. If so, they are shorts…again.

Once BTU drops below $5 (it closed today at $5.50, down from $30 or so in just the last year), the nails in its coffin will soon follow. ARCH has a lot more price downside (see the second chart below) and it will take some time but it will get to cliff BTU is standing on too.

(click on the charts for a larger view)

#Coal – waving good-bye to Cloud Peak Energy $CLD

Haven’t done much in this sector for a couple of years since Trump started promising to bail out the companies with taxpayer subsidies, but in recognition how much time and how many times I spent shorting these stocks in the past I’d like to wave good-bye to CLD, Cloud Peak Energy, the latest in a long line of stocks in this dying sector flushing sharehold equity down the shaft — Patriot Coal, Walter, Energy, Peabody Coal (bankrupt and reorganized), Arch Coal (bankrupt and reorganized), Westmoreland Coal.

This company, CLD, actually planned at one time to ship coal to China through my backyard but the environmentalists in the neighborhood took care of that.

Good riddance to the Cloud Peak’s stock!

CLOUD PEAK ENERGY ANNOUNCES SUSPENSION OF TRADING

P.S. This news forced me to take a look at the sector. I should have been paying attention. Almost every stock’s chart looks like BTU (see the chart below CLDP). They all feel apart at the same time, in June. Something must of happened. Maybe investors realized someone was not necessarily true to his word. Duh.

(click on the chartS for a larger view)