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Arch Coal - ACI - close: 52.37 chg: +2.17 stop: 48.99

Company Description:
St. Louis-based Arch Coal is one of the largest U.S. coal producers, with revenues of $2.4 billion in 2007. Through its national network of mines, Arch supplies cleaner-burning, low-sulfur coal to fuel roughly 6 percent of the nation's electricity. The company also ships coal to domestic and international steel manufacturers as well as international power producers. (source: company press release or website)

Why We Like It:
The coal stocks look like they are beginning to rebound after a very painful July-August correction. Several of them have broken through some short-term resistance levels and are building bullish reversal patterns on their weekly charts. ACI is one such coal stock. Wednesday's rally past $50.00 and its 200-dma is a bullish entry point to buy calls. We would also consider buying calls on another dip near $50.00. Our target is the $58.00-60.00 zone. The P&F chart is bullish with a $68 target.

Suggested Options:
We are suggesting the September or October calls. It is up to the individual trader to decide which month and which strike price best suits your trading style and risk.

BUY CALL SEP 50.00 ACI-IJ open interest=5449 current ask $5.00
BUY CALL SEP 55.00 ACI-IK open interest=3519 current ask $2.55

BUY CALL OCT 55.00 ACI-JK open interest=1450 current ask $4.20

Picked on August 20 at $ 52.37
Change since picked: + 0.00
Earnings Date 10/20/08 (unconfirmed)
Average Daily Volume = 6.4 million

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