Santa probably got a great deal on stocking stuffers for naughty kids this year… Coal prices have taken a long and sustained drop over the past year, falling 31% since this time last year.

It has everyone asking, “Where's the bottom?” Could Santa get an even better deal next Christmas?

Current analysis provided by BarChart.com lists coal's current spot price at $39.50 as a pivot point, which could provide a first level of support… or resistance.

What that means is that coal could take an even further, swifter dive from here, or it could stabilize. Confusing, I know. So you have to compare this to some other indicators. BarChart.com also says that every indicator (except one -- Bollinger bands indicate a hold) it uses is screaming, “Sell!”

These are for the short, medium and long-term indicators.

Another reason this weakness could continue is low volume. Demand is just not there… Coal production increased by 1% in November year over year while consumption by electrical power generation dropped 5% in September.

That's increased our coal stocks by 28% year over year.

One of the reasons for this increase in stocks was because we needed it. Our coal stocks were becoming very depleted, which, in turn, drove up the price of coal for the past year and a half. Producers increased deliveries, and in conjunction with a mild summer and a thus-far mild winter have depressed coal prices quite significantly.

Power demand is set to increase substantially in the coming years, and coal-fired power plants are expected to play a big role in producing electricity. But they are expensive and will certainly come under environmental fire, which could cause some upward pressure on coal prices down the line.

In the meantime, however, I don't see the bottom for coal prices… especially if this mild weather continues. (Here in Baltimore, it's 60 degrees. Must be one of those sunspots warming the earth…)

And recent negative price activity has really taken the wind out of coal companies' sails.

Just take a look at some of these losses since December 1:

Peabody Energy Corp. (BTU:NYSE): -22%

Arch Coal, Inc. (ACI:NYSE): -23%

Massey Energy Co. (MEE:NYSE): -21%

These companies have been hit hard. But for two of these, relief may come in the form of support points within their charts.

BTU took a massive tumble from its all-time highs back in May 2006. It found support on its 61.8% Fibonacci retracement line back in September. The stock climbed all the way back to its 200-day Moving Average, where it encountered some sharp resistance.

It has since been making its way back to the 61.8% retracement line. Will it find support again?

I think that will depend on coal prices. At about the same time, it looked like coal prices were stabilizing. If coal prices appear to strengthen, that might be just the thing to boost BTU back up to its 200-day MA.

ACI is in much the same position, though its movements aren't quite as strong or defined as BTU. For example, ACI found support just below its 61.8% retracement line, and didn't make it back to its 200-day MA.

Of the two, I think BTU has a better chance of making a comeback, but I don't think we'll see a break for its all-time high unless coal prices make a comeback of their own.

That's all for today. Tomorrow, we'll talk about base metals, and where they're headed in 2007.