Time to Buy $PCX

Patriot Coal Corp. ($PCX) is in the midst of a great buying opportunity that could yield a 15% move in the next two weeks of trading. Here’s why..

Buy the Dip

Patriot Coal has trended steadily higher after bottoming out at $9.76 in August, and recently rallied to highs above $18.00.

Every pull-back during this recent wave of strength has led to great “buy the dip” opportunities along the way. The current pull-back could be worth about 15% if price rallies to $20.00 – which I think it can.

The daily chart below shows the monthly value areas for each of the last three months. For those of you familiar with Market Profile, you know the value area is where 70% of the trading activity occurred in a prior period of time – in this case, one month.

In a bullish trending market, pull-backs to the value area are seen as a buying opportunity. Clearly, the market responded to the value area in November, which led to a fantastic rally (a move of 37% in just three weeks!). Again, we are seeing the same type of buying participation enter the market off the current monthly value area.

If $PCX remains above $16.00, there’s a good shot at price testing between $19.75 and $20.00 some time in the next two to three weeks.

Buy Signal

As you may already know, my Modified PEMA Crossover signal is one of my favorites for trending markets. As you can see from the chart, a new Long signal has fired, meaning we should see a new high within the current advance. Also, price remains above the 21-period pivot-based EMA, which is quite healthy.

Again, as long as $16.00 remains intact, a rally toward $20.00 could be in the cards for this stock ahead.

Let’s see how this plays out!

Cheers!

Frank Ochoa
PivotBoss.com

Follow Frank on Twitter: http://twitter.com/PivotBoss