Arch Coal Inc (NYSE: ACI) Remains Firmly In The Bear Grip Despite Bounce
Denver, CO, 07/26/2013 (Avauncer.com) – Arch Coal Inc (NYSE: ACI) (Closed: $4.01, Up: 2.82%) opened slightly lower on Thursday but buying came at the lower levels at the news of the quarterly cash dividend of $0.03 per share on the company’s common stock. The volume at 13 million was slightly higher than the average of 10 million.
The stock is trying to bounce to bounce from the new 52 week low it made on June 2013 at $3.78 but the attempt doesn’t look very strong yet. The fall from the October 2012 top of $8.86 is nicely contained in a downward channel in the weekly charts and the price made its swing low just on the lower boundary. This channel must be broken by the bulls to have even some slight hope of rallying. The upper boundary is currently at $5.
The long term chart puts the state of the stock in the right perspective – utterly in the grip of bulls with no sign of respite seen yet. There we can see a clear zigzag playing out from the 2008 top of $77.40. The stock lost about 86% of its value in the first drop and another 93% in the second drop. The channel containing this whole decline may give some support at $2.95 - $3. The second major fall from the 2011 top of $36.99 is clearly subdivided in 5 waves. The 5th wave seems to be incomplete yet and another decline to $3 levels may be on the cards after this brief counter trend rally gets finished.
The indicators like RSI and MACD are showing all the usual behavior of a bear market. The weekly RSI is traveling between 50 and 10 levels and the MACD remains firmly in the oversold zone. No positive divergence is visible in any of the timeframes. Every rally is expected to be sold into.