So coal had a bit of a bounce today. Some say it was because Romney, if elected, will cut regulation on coal and they will rip. Some say they were oversold and needed to bounce. This race is a dead heat in my opinion, so I would never make my bed based on that outcome, however, (and you can call me crazy), I was wondering if I am spotting an inverse head and shoulder pattern on the coal stocks.
For those of you that have real lives and don’t really care or know what this pattern means, it’s usually very bullish technically.
Not all of these patterns are perfectly symmetrical and some can be ugly, but it can be a precursor to a huge move higher over time.
I don’t want to get my bloomers in a twist yet, but for those of you that have hung with me on this coal trade, things may be developing in our favor.
Lets take a look at the charts. If anyone knows a way I can draw rounding patterns on a chart let me know, because these are straight lines.
All of the names above may be forming the right side of their right shoulders, so some more time is needed for them to validate.
As you know, the first two weeks of September were big for the coal stocks, but they retraced much of their gains. This is commonplace when a sector starts a move off the bottom.
Let’s see where we go from here. I’m still very bullish longer term as you know.
I will see you in the morning.