Getting Coal in Your Stocking May Be Exactly What You Want

This Coal ETF (KOL) is a basket of coal companies and is starting to show signs of a new bull market. A breakout and close above $26.00 should trigger strong buying with the potential of a 21% gain before it hits my first price target. This could go way past that, but one target at a time, folks.

Naturally, I would like to see a bull flag or pause in KOL over the next couple of weeks, then look to get long using the pivot low of that pause/bull flag as my protective stop. I'm not jumping in here as the broad market looks ready to correct and ¾ stocks follow the big board, which will pull KOL down.

ANR: My Top Coal Stock Pick

I pointed out ANR at $7.50 at the beginning of December, as it was the best-looking coal stock I could find. The two key indicators, price and volume, were clearly pointing to higher prices and the potential gain. Even if it was just played up to the Stage 1 Resistance Level, it still netted a 30% move. Crazy part is that there is the potential for a 100% rally to my first price target. Follow my free ideas here live.

You Want Gizmos or Coal in You're Stocking?

In short, I really like the coal sector for the first quarter of 2013. I'm not too worried about the fiscal cliff, as it's not the end of the world and the U.S., along with most other countries, are all bankrupt together, in my opinion. New rules and ideas will be implemented and life and business will continue. I am not too worried.

I am expecting stocks to continue sideways or higher into May, at which time a serious correction could take place. But don't worry -- we take things one week at time and I will be adjusting my outlook accordingly.

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This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

Chris Vermeulen is founder of the popular trading sites www.thegoldandoilguy.com and www.ActiveTradingPartners.com. There he shares his highly successful, low-risk trading method. Since 2001, Chris has been a leader in teaching others to skillfully trade in gold, silver, oil and stocks in both bull and bear markets.

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