Arch Coal, Inc. is engaged in the mining, processing,marketing and transportation of bituminous coal in the domestic steam market. For the FY ended 12/31/00, total revenues fell 10% to $1.40B. Net loss before accounting change fell 96% to $12.7M. Revenues reflect the temporary idling of the West Elk mine in Gunnison County, Colorado. Lower loss reflects the absence of a $364.6M charge related to the write-down of impaired assets.

April 5, 2001

Arch Coal Incorporated (ACI) produces steam and metallurgical coal from surface and deep mines primarily located in the central Appalachian and western regions of the U.S. The company offers its coal for sale to utility, industrial and export markets. Energy stocks are hot right now, but ACI is simply on fire. Looking at the daily chart, shares have been moving higher from a mid-December low of $9.37. Support has been strong at the 5-dma of $29.70 and has presented a number of quick entry points over this period. After testing this level once again during today’s trading session, shares now look poised for higher ground. Today’s rally did set an intraday new high of $32, as ACI broke above previous resistance set back on 3/28. Volume was impressive, as ADI traded 51 percent above its normal average daily volume. On a technical basis, all of the short-term readings look great. Relative strength and momentum are pointing higher, with the MACD bouncing off its lower moving average line. Today’s close is also of interest, as shares finished right at the previous all-time high. We also think that ACI could be fueled by strength in the broader market should today’s sharp market rally continue. We do believe, however, that there could be some short-term selling, given the 402-point pop in the Dow. As far as playing ACI, we’ll look for a run above today’s intraday high of $32 or a pullback to the 5 or 10-dma of $28.95 to signal possible entries. Our stop is just under the 10-dma at $28.25.

Picked on April 5th@ $31.50
Change since picked 0.00
Stop Loss @ $28.25

April 10, 2001

Although the price of coal has risen sharply over the past couple of months, the cost of producing electricity from coal is still less expensive than natural gas. This additional demand should continue to bring plenty more buyers to the coal industry. On the day, a broad market recovery helped fuel the coal sector higher, as ACI gained 3.75%. With this rally, the stock was able to punch through its previous top and set an all-time new high of $33.47. Volume came in 24% above the three-month ADV with 715,000 shares traded. This gives us additional confidence that today’s advance will be followed by more short-term strength on the upside. We do need to point out, however, that the stochastic is a bit rich, but could be offset by a positive MACD and a strong uptrend in the OBV. So, should an extended rally unfold, we’ll anticipate initial resistance to emerge at today’s intra-day high of $33.47. Support looks good at the 5-dma of $31.27, and just lower at the 10-dma of $30.30. Look for entries if midday volume can reach 280,000 shares, as ACI bounces off support or breaks above resistance at $33.47. Our stop is now just under the 10-dma at $30.00.

Picked on April 5th@ $31.50
Change since picked +1.41
Stop Loss @ $30.00

April 8, 2001

With the price of coal more than doubling in recent months, traders have turned up the heat within the coal industry. The real standout in the sector has been ACI, which has added nearly 70% over the last three months. Sound like a momentum play? A look at the daily chart will certainly convince you. What we specifically like about the chart is how traders have been consistently buying on the pullbacks. This note is of importance to us now that ACI seems to be in the process of consolidating. Turning to Friday’s action, shares gave up 1.14 points or 3.62% to finish the week at $30.36. Sector related weakness might have been a contributing factor to Friday’s fall, as the Standard & Poor's Energy Index (AXE) slipped 2.02% to close at 1584. Volume on the day came in just under the 3-month ADV, as 436,000 shares crossed the tape. Should shares resume an uptrend into next week, we’ll look for resistance to emerge at the high of $32, followed by a harder challenge at the $35 mark. Support will come at $30, bolstered by the 5-dma of $29.78. Look for entry points when shares bounce off support or break above the $32 level on midday volume of at least 280,000 shares.

Picked on April 5th@ $31.50
Change since picked –1.14
Stop Loss @ $28.25