NEW YORK ( -- What if you just got a lump of dirty old coal in your stocking for the holiday, how would you feel? The only individuals who would appreciate a dirty gift like that would be those forward-looking investors who see major opportunities before they become the next big movers and headline news.

Knowing how to spot Stage 1 patterns is one of the most important bits of information you need to know as an investor. This one pattern is how I found

Research in Motion


, which is now up 100% in the past 30 days,

Alpha Natural Resources


, up 30% in two weeks,

First Solar

(FSLR) - Get First Solar, Inc. Report

up 20% in 20 days, the list goes on. My main focus is on ETFs, because of the lower risk they provide, while being very powerful when applied to individual stocks.

Coal and coal stocks have been out of favor for almost two years now. But these unwanted and hated shares may soon be owned by the masses, or at least by traders and investors. A few weeks ago, I talked about the four stages all investments go through and which patters you must be able to spot in order to make huge money investing while having very limited downside risk. You can read about that

here, where I used


(AAPL) - Get Apple Inc. (AAPL) Report

and Research In Motion shares as my examples.

In summary, trade with the big board and only focusing on buying stocks, ETFs, etc., as they are coming out of a Stage 1 Accumulation Basing Pattern. This puts the odds greatly in your favor for not only winning the majority of your trades but generating above-average returns.

The Big Board: NYSE

TheStreet Recommends

Weekly Major Stock Market Trend

: The

New York Stock Exchange

is the big board. This chart formed a reversal candle last week, which points to lower prices. It's likely we see a one- or two-week dip before buyers step back in. Until then, individual stocks should pause or form mini bull flags until the sellers are finished and buyers step back into risk on assets (equities).

Coal Sector ETF Showing Stage 1 Basing Pattern

Coal stocks have been bouncing on the bottom for some time and if you did not review the Stages Report using the link above, then do so now, so you know what to expect in detail.


Coal ETF

(KOL) - Get VanEck Vectors Coal ETF Report

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 and 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.