It’s hazardous to assume a stock is good value just because it’s falling and out of favor. Buying too early in this situation usually gives you a sharp lesson in exactly WHY that stock was falling, as you helplessly watch it fall even lower. The amateur at this point assumes that it’s even better value at these lower levels, and buys even more, throwing good money after bad.
Remember: “Stocks can fall further than you think possible, and can rise higher than you can imagine.”
Wait for a ‘falling knife’ to clatter on the ground decisively before you try to pick it up, and that’s what Carl Delfeld’s ‘Value Bounce’ service is all about.
And I think one sector’s long-time falling knife may be starting to make that ‘clattering’ along the ground…
Coal.
In the new world of solar panels and electric cars, coal doesn’t seem very trendy anymore, and the long term chart of the coal miners index tells that tale:
Source: Stockcharts.com
But this last week, one of the coal mining stocks in my ‘Money Mentor’ portfolio popped significantly higher, and it’s now close to doubling in value since I recommended it to subscribers only a few months ago. And that got my attention to check out further if this sector was truly rebounding after its long drop.
The long term chart above shows a decisive ‘V’ bounce followed by a steady uptrend that, and this is the best part, took it over the 30-week moving average (blue line).
Let’s take a closer look:
As you can see, KOL seems to now be in a sideways channel, bouncing between $18 and $20. If KOL can hold above its 30-week average (curvy blue line) for a while longer this will be bullish. What would be the clincher is if it broke up to $21, out of that channel, and on strong buying volume. That’s why some coal mining stocks have begun to pop up in our recommendation services!
Best,
Jim.
