After a not so surprising weak Q4'11 report, coal miner Alpha Natural Resources (ANR) started trading down nearly 5% today. It didn't take long for the stock to reverse and is now trading up nearly 3%.
It really isn't worth focusing on the earnings report. Alpha Natural is a long term trade on the increasing demand for met coal in countries like China and India. The low cost of natural gas is having a dramatic impact on thermal coal pricing and demand placing serious margin pressure on Alpha Natural. Since it is all temporarily, it just isn't worth the effort. Nat gas prices will eventually rise and China appears to be storming back. Normalized earnings will be the key going forward.
More importantly today was the major reversal that has a tendancy to signal a bottom in the stock. With the major support now put in around $20, longs have a basis for being more aggressive. If the stock can break above the channel around $22.50, longs will get very aggressive.
Update 3pm: ANR closed at $20.46 on high volume just above the 10ema. Very bullish sign if the stock can get some follow through next week.
Disclosure: Long ANR. Please review the disclaimer page for more details.