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Chart of the Week
Alpha Natural Resources, Inc. (NYSE: ANR)
For
Monday, February 4th, 2008
Tony Golan
Chief Technical Analyst
StockProfit.com™
 ZoomAlpha Natural Resources, Inc. (NYSE: ANR) is in a strong long-term up-trend. The stock is making higher highs and higher lows above a rising 200-day moving average (the red line in the chart above). Relative Strength Differential (RSD), our proprietary indicator for selecting stocks in super-strong up-trends, is well above the 25% threshold, indicating that ANR is currently outperforming the S&P 500 by a wide margin.
ANR crossed back above the 200-day moving average and thereby reversed the long-term trend back up in April of last year. However, it wasn't until mid-August that ANR hit a low of 15.92 (point 1 on the chart) at the 200-day moving average and started trending up from there. ANR rallied to a new high of 35.20 in late December (point 2), then got dragged down by the market, finding support at the 200-day moving average once again (point 3). Since then, ANR has rallied from 21.92 to a new high of 35.75 on Friday.
Since the most recent low in ANR was at 21.92, buying ANR now would necessitate placing a stop below 21.92, roughly a 37% stop. If a person were to place the stop any closer than below the most recent low, they would get stopped out on minor corrections against the trend. Therefore, as usual, it is far better to wait for a correction and buy at the end of the correction.
The strength ANR showed in the past week and a half is reason enough to put it on your watch list and to keep an eye on it in case it should correct and allow a low-risk entry point.
Tony Golan
Chief Technical Analyst
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