With winter coming on, some of the coal stocks are starting to look really bright – November 4, 2022


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Coal; this is like the Morningstar kind of index of all these different coal companies. You can look at them all there ( iX1050 ), there are 14 of them. This has been forming this really, really long base, it’s not a cup and handle; If you wanted to I guess you could say it’s an inverse head and shoulder continuation pattern, which, by the way, is a pattern. But one way or another this thing sure looks like it’s going higher, I think it is.

I am looking at these different coal stocks, which I want to show you. Peabody ( NYSE: BTU ) is almost there, but not quite. If the stock breaks out above $29.00, like right here on this day the high was 28.74, so $29.00, not 30.00, 30.00 is an obvious place to sell, you have got to be aware of that. But if this breaks out above $29.00 this could work.

Again, a strong sector, a strong industry group. Coal stocks are strong, and winter is coming on, that’s a big deal. You can look for these stocks, they’ve consolidated gains; they’ve already consolidated these gains. BTU ( NYSE: BTU ) ran up from last December up into April, almost 300 percent. So doesn’t it make sense that you are going to get this consolidation?

Prior to that, you get this kind of move, 250 percent. And then what do you get after that? We get a sideways move of 6 months. And so it kind of makes sense, after this, that you are going to get this sideways consolidation. Well, this has been over 6 months and my takeaway from that is when this stock breaks out and ultimately it’s going to. But when this stock breaks out it should have a pretty nice move to go.

So this is absolutely something that you want to keep an eye on. Keep a price alert set, I would say at $29.00. So if the price alert is hit you can come back to the stock and then decide what to do. Ramaco ( NASDAQ: METC ); this is a stock that kind of needs to clear the 200-day moving average. I will tell you right off the bat though, BTU ( NYSE: BTU ) is my favorite in this sector because of the technical setup, not by now, but because of the possibilities that we are seeing here.

Another one that I like is Consol Energy ( NYSE: CEIX ). A 6.35-yield isn’t too bad. Coal, is a strong sector, with good possibilities. It is not the kind of base that BTU ( NYSE: BTU ) has but still, this is one that could work. I would kind of look for resistance right around there. This definitely needs to stay above the 50, and also be mindful that the 50 is drifting lower. We really need to see this be above the 50 enough to where you have a flat 50, maybe even a move higher. But when it’s moving lower, that is something that you don’t really want to be a part of.

Alpha Metallurgical ( NYSE: AMR ). I like this, the weekly chart shows a really, really long sideways range. The daily chart, I don’t really have an entry here. On a stock like this, the only way to responsibly buy this stock would be on some kind of a pullback because it is giving you no indication that it is going to break out here. It just keeps flirting with it but is really not giving you any indication.

And so the only reason you would want to buy this stock is, okay, it’s pulling back closer to support, like here or even here. It has pulled back closer to support, which means that I can buy it, I can take a small pilot position, a little position, close to the 50-day moving average. I keep a stop right down there, that’s a low-risk entry. A small position, a tight stop, it’s all good. You can’t have a tight stop where this is here, it’s just not at the right place so I would want to wait.

Arch Resources ( NYSE: ARCH ), this is way too sloppy. There is nothing here but you want to watch it, it’s actually got a crossover in the wrong direction where the 50 is now below the 200. Alliance Resource ( NASDAQ: ARLP ), I actually own this. I don’t have a big position at all. I don’t have a big position on anything other than dollar bills. This is still kind of consolidating, I’ve owned it for a while. If I was looking at it to buy it now, yes, I think I would take a small position.

A small position with a stop right down here, something like that. But I am also noting that the 50-day moving average here is starting to drift a bit lower. Maybe I am going against some stuff that I just said but this is why, this is some really nice impressive volume here. This looks to me like there is some institutional activity here, in a good way.

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