The RNO (Rhino Resource Partners) Long Trade/Growth & Income Trade Idea posted on Oct 21st went on to make a confirmed break & close above the multi-year downtrend line on Oct 23rd, thereby triggering an entry.  The breakout was accompanied by above average volume (I typically like to see volume of 1.5x or above average volume on long-side breakouts), which helps increase the odds that the breakout will stick.  Since then, this high-yielding coal stock has managed to successfully backtest the trendline from above during every trading session including a successful tag & bounce off the trendline at today’s lows.  Although my preference would have been to see the stock continue to rise impulsively immediately following the breakout last week, so far the recent price action can be construed as bullish as long as RNO continues to trade near or above the downtrend line.

The first chart above is the updated 3-year daily view of RNO (click here for the live chart), followed by a zoomed-in view of the daily chart showing one possible scenario.  I’ve drawn a white uptrend line off the recent lows and wouldn’t be surprised to see RNO continue to ride the primary downtrend line lower for a few days until it find support around the new uptrend line.  Also note how prices are compressing just below the 200-day EMA, which has acted as resistance in the past.  Therefore, a solid break above the 200-ema would likely be the next catalyst for a move towards the first price target (resistance is a 14.30, so best to set your sell limit a few cents below if you plan to book partial or full profits there).  T2 is my preferred intermediate target, where I will likely book some profits (quite likely adding those shares back on a pullback) with T3 being my longer-term swing target.

FYI- To those signed up to receive email notifications of new posts, I will be updating the charts of the PWRD & GTAT short trades, both of which recently hit their first profit targets.  Email notifications will not be sent but those charts may be viewed on the site shortly.