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Two Ways to Play: Lump of Coal for Christmas

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Strengthen your portfolio in good times and bad.

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Don't fret if you found a lump of coal in your Christmas stocking. You may be thanking Santa Clause later this year. According to the Telegraph, analysts from J.P. Morgan Chase think coal prices could go from $75 to $85 a ton next year based on supply side issues and rebounding demand from China and India. Even the environmentalists can't deter the minds of bullish coal investors. Consider that the recent Copenhagen climate conference failed to reach an agreement on lowering emissions and how they should be financed. The implications are clear: businesses need more incentive in investing in expensive renewables while burning fossil fuels remains cheaper.

From the Bull Pen: Momentum players are liking the breakout in international coal producer Peabody Energy (BTU). If you're playing along, consider setting a sell stop 2% below entry. See also the coal ETF (KOL), which has the same setup.

From the Bear Cave: The coal sector is hot so bears must step aside. But one high risk-high reward strategy is to identify sharp reversals. Consider downside entry in Alpha Natural Resources (ANR) if the stock were to quickly reverse and close below Thursday's low of $45.60. If such a move were to happen, set a 2% buy stop above entry.

For more ways to play and other trading ideas from more than 30 top market pros, take a free trial to our Buzz & Banter.

A Quick Check Around the World

Asian trading closed with the Nikkei 1.33%, India 0.74%, Hang Seng -0.17%, Shanghai 1.51%, and Taiwan 1.06%.

Across the pond, we see the FTSE 0.56%, CAC 0.73%, and DAX 0.76%

As of 8:10 AM EST, S&P Futures are trading +1.75 to 1123.75. NasdaqFutures are +4.00 to 1872.50.

A Look at Commodities

Over in commodities, crude oil is +0.28 to 78.33 while gold is +8.60 to 1113.40 this morning. Silver is +0.17 to 17.610 and copper +0.026 to 3.320.

The dollar Index is -0.225 to 77.950.

Not much on the radar today. Click here for the full list of the week's events.

Good luck today!
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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