• Chart of the Day: Peabody Energy (BTU)

    by  • September 25, 2013 2:55 pm • Charts to Watch, Quick Hits, Tony Venosa's Chart of the Day • 0 Comments

    Today’s chart is of Peabody Energy (BTU) engages in the mining of coal. The company operates through Western U.S. Mining, Midwestern U.S. Mining, Australian Mining, Trading and Brokerage, and Corporate and other segments.

    Ticker:  Peabody Energy (BTU)

    What I Am Looking At:

    • BTU has been underperforming the broader market and its peers in the coal sector, down more than 32 percent year-to-date
    • Shares have seen a reflex rally of 30 percent from late June lows
    • Looking for a resumption of downtrend from break of bearish rising wedge pattern which tops just beneath round-number $20 level
    • Enormous peak call open interest at the 19- and 20-strikes could pressure shares lower on an unwind situation
    • Relative Strength Index (RSI) trading in bearish range from overbought condition
    • The 50-day buy-to-open call/put ratio stands at 2.27, meaning option players have been scooping up twice as many calls as puts during the past 50 days indicating a near extreme in optimism
    • Analyst community also showing optimism as 11 out of 19 rate the shares a “buy” or better, could see downgrades on this poor performer
    • Unconfirmed earnings report set for 10/22


    Conclusion:  Targeting a move lower down to the base of the rising triangle which coincides with half the 52-week high between $14-$15.

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    Tony Venosa, CMT is a Senior Options Strategist and works on the trading desk at Schaeffer’s Investment Research. He joined Schaeffer’s in 2010. He has worked in the finance industry for over 15 years. He began his career as a trading assistant in Chicago on the floor of the Chicago Mercantile Exchange. He later moved upstairs and worked as a commodities broker on both the retail and hedging side. He left the brokerage industry to begin his trading career as a proprietary equities trader at a Chicago firm. In 2000, Tony moved backed to his hometown and continued trading his personal account. He later went on to earn his Chartered Market Technician designation. He earned a B.S. in Finance from Miami University. Tony’s main focus is short-term directional option trading.


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