Peabody Energy (BTU): Special Situation

Will BTU go bankrupt before or after December 31st? That seems to be the main question; at least from a SeekingAlpha perspective.

Peabody is in serious trouble, no doubt. It also represents an opportunity as detailed below.

Any stock, equity or index that’s declined throughout the year is subject to “tax loss” selling.

Selling that (typically) takes place during the last week in December and is negated somewhat during the first week of January.

Peabody is now in position to perform according to that scenario

BTU reached its all-time low at just 0.80, on November 10th.  If we get Wyckoff bottoming action, (Schematic #1) we’ll have an automatic reaction (happening now) and then a secondary test.

That test could be above or below the recent lows.  If the test occurs before December 31st and pushes below 0.80, we have a spring (reversal) set-up.

Once tax loss pressure is released at the beginning of the New Year, expectations would be for a pop to higher levels.

This is not a recommendation but a notification of potential, short term (very short term) opportunity.

On the longer term and even more speculative is what’s taking place from a world-wide perspective.  Specifically, we have increased seismic (earthquake) events as well as volcanic activity.

This activity is directly (and has been proven to be) related to grand solar minimum cycles.  The largest volcanic eruptions in recorded history occurred during solar minimums.

Mount Tambora erupted with a VEI (Volcanic Explosivity Index) of 7, Super Colossal, during the Maunder (solar) minimum.  That eruption was the largest ever recorded by humans.

This is just background information.  Certainly it’s unknown if we’ll get the same scenario.  However we do have a source that can reliably predict earthquakes and volcanic activity. 

His site is here. That is, until he is kicked off YouTube as many have been.

Dutchsinse is his YouTube handle and before anyone scoffs, his work is shaking it up at the USGS; they at one time, requested that he be arrested.

Conversely, he has offered his technique of earthquake forecasting to the USGS. The response was typical. ‘Not interested’. 

After watching some of his hour-long updates where he covers seismic and volcanic activity for the entire earth, judge for yourself.

Why is earthquake activity important to a coal mining operation?

If we get a massive VEI 7, type eruption, it will eject huge amounts of ash into the atmosphere.  That ash will block out the sun and render any ‘solar power’ ineffective immediately; for months-to-years.

Conversely, natural gas and coal prices could have an instantaneous jump with BTU (if they are still around) moving higher accordingly.

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Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.
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