Market isn’t believing the hype

The charts below overlay the stock price of Australia’s largest independent coal miner, Whitehaven Coal (WHC.AX) and the Australian premium coking coal price.

The opportunity of leveraged cashflow and profits that an operational company offers is the reason many investors own shares in such companies when trying to benefit from a move in an underlying theme or commodity.

The (under)performance of Whitehaven over the 2 timeframes shown below, especially in light of the recent surge in coal prices tells me that the market isn’t a believer.

Coinciding with other overbought and extended extremes, selling WHC.AX last week around $3.60 was prudent.

Today’s $3.35 is still OK to do so.

Let’s see how it looks when it pulls back to $2.40 or so.

October 12, 2021

by Rob Zdravevski

rob@karriasset.com.au

#WHC #coal