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Trade Setup in ACI and PCX

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January 16, 2012 – Comments (0) | RELATED TICKERS: PCXCQ.DL , ACI

Here are two stocks in the Coal sector that have very similar patterns- descending triangle patterns that are  have either just broken below support or are near it.  But they have more in common looking at the longer-term charts.  In addition these two stocks are both down around 65% since January 2011 so they are mostly oversold. 

PCX:  PCX has gone from the high 27's to the high 7's in over a year a decline of more then 65%.  Short-term This stock broke below its support of 8.01 and was down over 12% on heavy heavy volume on Friday.  PCX broke below 8.01 which was the low of since November.  The next support level is at 6.92.  PCX still has the potential to move another .95 lower.  But with such strong volume on Friday the selling might have stopped and looking at the longer-term weekly chart you can see that this 7-6 area has been long-term support. 

Chart Analysis for PCX

PCX: Weekly chart, this shows the long-term support this level.  A key support is at 6.92 PCX needs to stay above this.  As PCX heads near these lows buyers could recongize the support and bring in some buying pressure preventing a further decline. 

Chart Analysis for PCX

ACI:  This again is very similar to PCX, down over 65% and formed a descending triangle.  ACI has not broken below its triangle though. ACI has tested the November/October lows yet around 13.59 and remained there.  A break below sends ACI to the October lows of 13.08.  Past that level like PCX, ACI starts to hit long-term support.

Chart Analysis for ACI

ACI Weekly:  The 12.15 level is the 2009 lows and it are lows from 2004.  This level may be very hard to break and would be a logical bouncing point for ACI. 

Chart Analysis for ACI

Overall: These stocks have also been crushed 65% over the last year so they are very oversold. Short-term stocks appear slightly weak  but are nearing some very long-term support and could be good pick ups at those levels.  PCX has short float of 17% and ACI has a 5% not the best short interest but PCX is high.  A stock down 65% means the crowd is short/selling this trade is potential very over subscribed so the play just might be long on these stocks if they get to key levels. 

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