Console Energy - CNX - close 34.81 change +0.84 stop 32.95

Company Description:
CONSOL Energy Inc. (CONSOL Energy) is a multi-fuel energy producer and energy services provider primarily serving the electric power generation industry in the United States. During the year ended December 31, 2009, the Company produced high-British thermal unit (Btu) bituminous coal from 16 mining complexes in the United States. CONSOL Energy has two principal business units: Coal and Gas. The principal activities of the Coal unit are mining, preparation and marketing of steam coal, sold primarily to power generators, and of metallurgical coal, sold to steel and coke producers. The principal activity of the Gas unit is to produce methane gas for sale primarily to gas wholesalers. All Other segment includes terminal services, river and dock services, industrial supply services and other business activities, including rentals of building and flight operations. Its subsidiaries include CNX Gas Corporation (CNX Gas), Fairmont Supply Company and CNX Marine Terminal Inc. (source: company press release or website)

Target(s): 37.50, 38.80
Key Support Areas: 33.90
Key Resistance Areas: 35.75, 37.55
Time Frame: 1 to 2 weeks

Why We Like It:
I believe the sell off in coal stocks was overdone and they appear to be building momentum for a move higher. CNX double bottomed with lows on Friday and Monday and has responded nicely. The stock also has longer term support dating back to resistance in late 2008 (see weekly chart below). I would like to see some retracement in the recent gains and use $34.05 as a trigger to enter long positions. Our initial stop will be $32.50 which is just below 5/20 and 5/24 lows (pull up a daily chart). Our targets of $37.50 and $38.80 are both below the stock's 20 and 50-day SMA's and also below the recent downtrend line. This is a countertrend trade that has potential but I also view it as aggressive and quick so please use small position size to manage risk.

Suggested Position: Long CNX stock if it trades down near $34.05

Option Traders:
Suggested Position: Buy July $35.00 CALL, current ask $3.20, estimated ask at entry $2.80

Annotated Weekly Chart:

Entry on May xx
Earnings Date More than 2 months (unconfirmed)
Average Daily Volume: 7.0 million
Listed on 5/25/10, 2010