Trading CNX | The Mesh Report

Trading CNX

Christian Tharp, CMT May 18, 2012 Comments Off on Trading CNX

Consol Energy, Inc. is a producer of coal and natural gas for global energy and raw material markets, which include the electric power generation industry and the steelmaking industry. During 2011, the company produced 62.6 million tons of high-British thermal unit bituminous coal from 12 mining complexes in the United States. In addition, it provides energy services, including river and dock services, terminal services, industrial supply services, coal waste disposal services and land resource management services. The company operates in two segments: Coal and Gas. The Coal division consists of four reportable segments, which includes Thermal, Low Volatile Metallurgical, High Volatile Metallurgical and Other Coal. The Gas Division consists of four reportable segments, which include Coalbed Methane, Marcellus, Shallow Oil and Gas and Other Gas.

Please review the 1 yr chart of CNX (Consol Energy, Inc.) below with my added notations:

During the last (8) months CNX has held above an important, 52-weel low level of support at $30 (black). Since August the stock has commonly found support (navy) and/or resistance (red) at $35. There is also a “mini” level running at around $32.50 (blue), which had provided support for the last (2) months. Before trading CNX traders will need to analyze the market to decide when they want to enter a trade AND which side of the trade to be on.

The Tale of the Tape: CNX has several levels to watch. A break below $30 would provide an excellent short opportunity. Rallies up to $32.50 and/or $35 could also provide short trades IF you are looking to short when/if those levels are approached. If you like long plays, a pullback to $30 or a break above $32.50 or $35 would provide those trades.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade.  Capital preservation is always key!

Good luck!
Christian Tharp, CMT

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