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, 19,2001

After providing us with a sharp rally through all of last week, ACI shares may have finally encountered a top. Wednesday’s sharp bounce off $36.25 was trailed by heavy selling that sent the stock falling to our stop at $33. Although a rebound could take place at any time, we feel that with the stock’s extended rally it’s probably a good time to exit with a profit.

Picked on April 5th@ $31.50
Profit/Loss = +1.50 (+ 5%) (Stopped Wednesday @ $33.00)
Best Profit = +4.80 (+15%

April 17, 2001

Shares of the second largest U.S. coal producer hit new highs on Tuesday, as Lehman Brothers released favorable earnings estimates and set new price targets for the coal producing giant. In its report, the brokerage firm lifted the 12-month price target on the stock to $42 from $30 and re-adjusted 2001 earnings per share estimates to 60 cents from 40 cents. Traders took the report positively and drove ACI higher by $1.72 or 5.09% in today’s trading. More importantly, ACI shares were able to take out a tough barrier at the $35 mark and close at a new all time high of $35.50. The rally was backed by volume that came in greater than twice the stock's three-month average of 591,700 shares. This helped Money Flow turn sharply higher and positions us for more gains later in the week. To that end, we’ll now be looking for new entries to be triggered when ACI breaks through today’s intraday high of $36.30 or bounces swiftly off $35 on volume that puts the stock on track to reach the 3-month average by days end. We recommend raising stops to $33 to lock in profits.

Picked on April 5th@ $31.50
Change since picked +4.00
Stop Loss @ $33.00

April 12, 2001

As the demand for more power continues to surge, the market for coal stocks continues to stay strong. More evidence of this came on Thursday, as the largest publicly traded coal company, ACI, furnished investor with a nice rally late in the day. Despite a gap down at the open, ACI shares reached higher ground by Thursday’s closing bell, finishing up 35 cents to $32.25. Volume trailed the three-month average, however, as 293,800 shares crossed the tape. We will likely need volume to increase to at least the three-month ADV of 590,600 shares if the stock is to follow through with more gains on Monday. Nevertheless, we want to point out that the bigger picture remains in tact for our play, as the stock continues to ascend sharply higher without breaking the upward trendline. The MACD and On-Balance Volume indicators also remain strong. With that said, should ACI reach for higher levels in the upcoming week, we’ll look for further resistance to occur at the $33.72 mark (52-week high), trailed by a tougher barrier at $35. Support will come at the 5 and 10-dma’s of $31.83 and $30.76, respectively. As far as additional entry points, we’ll look for a run above $33.72 or a pullback to the 5- or 10-dma’s to signal our buys.

Picked on April 5th@ $31.50
Change since picked +0.75
Stop Loss @ $30.00