The Exception to the ‘Coal Sucks’ Rule

Anyone that follow me on Stocktwits or twitter sees a lot of charts with ideas posted on the weekend. And often I will give a summary of what I see in a sector. For the past 2 years that summary has often included, “And coal still sucks.” It has become almost comical as many will now quote me on that to their friends and colleagues. Well, there is an exception to every rule. And for this one it is Westmoreland Coal, $WLB. The last time I discussed this stock, in September 2012 in W is For Westmoreland it was trading under $10 and a trigger of 10.25 was going to send it higher. Boy did it ever now over 22.50. And if you missed that run it is set up for another trade right now.

wlb

The chart above shows the strong jump higher in December 2013, with a slight pullback midway as it drove to the consolidation zone between 20.50 and 22.25. After consolidating a month there it choose Thursday to peek over the top and close there. The break out triggers two Measured Moves higher. The first to 23.95 and the second to 28.90.Notice that the stock has been under accumulation and it has support for more upside from a rising and bullish RSI and it has a MACD that is level and starting to turn up. The start of the move came off of a touch at the 20 day Simple Moving Average (SMA), where the last strong run began. Using the consolidation zone as a stop it offers a good reward to risk higher. It trades less than 100,000 shares a day so avoid it if you want institutional size.

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