“I will study and be ready, then maybe the chance will come”–Abe Lincoln
I was going to talk about the $QQQ and the $SPX tonight, but my favorite collection of lost souls rallied like scalded monkies today.
Coal stocks ($KOL) exploded out of the gate today and never looked back. China news prompted it, then natural gas started humming. It was perfect storm for the coal longs and the shorts were emasculated. $ACI, $ANR, $WLT, $BTU AND $CNX just tore it up.
I’ve been deeply long in coal for three or four months now, taking pain every other day. It happens when you take a directional bet over time. You will never catch the bottom.
I’m not a contrarian, but in this case I was. Why? Because nothing stays shit forever. Had you bought the fear in Europe that the pundits and charlatans puked out everyday you missed 40% moves in those ETF’s. You also could have made real wood being long the euro.
Remember treasuries? They were going to 1% right? Pundits are great for filling air time, not so much for your P&L.
So whats the difference between what happened today and what happened with that head fake short squeeze between Sept1 and Sept 15 when the group came crashing down?
First of all the group is dry. What is dry? Much of the selling has been done. Shorts will go pick on something else now. I have a bunch of names I’d rather be short than coal.
Second of all, natural gas is ripping.
Thirdly, China needs coal again, how fast things change, Germany is buying more coal than strudel cakes lately. Did you know that? India burns all kinds of shit with coal.
Lastly, the difference between now and a month ago? The sector has had a month to rebuild a base and sometime when that happens, a very bullish technical formation occurs.
A BULLISH INVERSE HEAD AND SHOULDERS PATTERN IN ALL ITS GLORY.
This article is dedicated to the analyst who put a sell on $ACI Monday morning.
To see what I’m doing with this group over the next six months you can subscribe here.