When it comes to active trading, the "what" and "where", are infinitely more important than the "why". For instance, coal stocks have been on fire lately (what), rising strongly over the past two months (where). Rather than attempting to analyze why the sector is moving, active traders are often better off identifying that it is in fact moving in a direction, and then building a trading thesis that can attempt to capture part of the move. The "why" is often vague and uncertain, and ultimately not necessary for traders relying on technical analysis to identify trends.
While I could guess at the reason for why coal stocks are seeing accumulation, a quick glance at the Market Vectors Coal (NYSE:KOL) ETF shows that the group as represented by the fund has doubled in price from the March lows to current prices. KOL cleared a consolidation in early April, and really heated up in May with volume surging. Currently, KOL is holding above its 200-day moving average and appears to in a flag type consolidation. more...
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