Last week we highlighted the rapidly improving technical behaviour of coal stocks (click here for the article). It seems now we have at least some confirmation of an improving fundamental outlook. Rail car counts have begun to show signs at least of improving. The Association of American Railroads (AAC) releases a monthly report detailing rail carloads for 19 major commodity categories, as well as intermodal trailers and containers for a group of railroads that collectively account for the vast majority of total U.S. and Canadian rail traffic. In their latest report there has been a decline in deterioration in rail car counts overall and particularly for coal car counts:
Sure, there has not been an increase in rail car count but “merely” a decline in deterioration, but we are not interested in the absolute number of rail cars rather we are interested in the trend because stock prices are based on expectations. Is the decline in deterioration enough to make us bullish on coal stocks? In itself no, of course there are many other factors, but at least it is a step in the right direction from a fundamental perspective which provides at least some confirmation of the technical patterns developing in coal stocks.
Our global wealth builder portfolio (Earnslaw), which consists of just 12 ETFs and is the vehicle in which we manage our retirement funds, is up 27% since the start of the year. Subscribers are privy to the holdings, weightings and trades prior to us executing them.
