NRP (Natural Resource Partners) hit the first target for a quick 4.5% gain on Tuesday and has traded through that level every day this week (including today). NRP is one of eight coal stocks in the Active Long Trades category, most of which are currently profitable and several of which have already hit one of the early profit targets. With the coal stocks making up over 1/3rd of the Active Long Trades at this time, the sector remains one of my favorites on the long-side. However, with the odds of a broad market sell-off elevated at this time, it remains prudent to raise stops or take partial or even full profits (depending on your trading plan and personal outlook on the market) as price targets are hit. Updated daily chart shown or Click here for the live chart of NRP.
When trading, always remember to incorporate prudent diversification amongst your positioning. Birds of a feather flock together and as such, the coal stocks (for the most part) will typically move in synchronicity. Although the coal ETF (KOL) is one of the eight current Active Long Trades in the coal sector, my preference is usually to trade the most bullish stocks within a sector vs. the sector (ETF) itself. For diversification purposes, I will usually take a "shotgun" approach, buying (or shorting) multiple positions within the sector. When doing so, it is imperative to figure the total exposure you want to have to a sector and then adjust the position size of each trade accordingly. Besides KOL, the individual coal stocks in the Active Long Trade category are ANR, BTU, CLD, CLF, NRP, RNO & WLT (with some of these companies mining other commodities such as iron or other metals as their primary product). As of now, the charts of the coal stocks continue to look constructive & some of these trades might soon offer objective add-ons or new entries as they pullback to digest the recent gains.