Todays Big Stock: Walter Energy, Inc. Common Stoc (NYSE: WLT)

As a trader, remember to always select stocks that move well. Making money in the market is all about small losses, big winners. You can be wrong an awful lot as long as when you’re right, the winners are big. One stock in particular that moves well enough to give you the great gains when you’re right is that of Walter Energy, Inc.

Walter Energy, Inc. is a producer and exporter of metallurgical coal for the global steel industry and also produces steam coal, coal bed methane gas, metallurgical coke and other related products. Walter Energy operates in three business segments: Underground Mining, Surface Mining and Walter Coke. It operates two underground metallurgical coal mines in Southern Appalachia’s Blue Creek coal seam, the No. 7 Mine and the No. 4 Mine, both operated by Underground Mining, one metallurgical coal mine operated by Surface Mining, Taft’s Reid School Mine, and three steam and industrial coal mines operated by Surface Mining, Tuscaloosa Resources, Inc.’s East Brookwood and Highway 59 Mines and Taft’s Choctaw Mine.

Before discussing potential trading opportunities, please take a look at the 1-year chart of WLT (Walter Energy, Inc.) below with my added notations:


WLT has a common price level at $70. You can see that each time WLT has bounced on $70 level the stock has went on runs of $15, $15, $10 and now $5. When the stock fell below $70 in September, then rallied back up to hit it as resistance a few days later, you will notice the $15 run down to $55. The point being, when playing WLT of the $70, the stock can go on some very profitable runs.

The Tale of the Tape: WLT is a stock that moves very well, thus providing great risk/reward trading opportunities. A long trade could be entered at $70 with a stop below that level. If the stock were to break back below $70, a short trade could be made with a stop above the level.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade.  Capital preservation is always key!

Good luck!
Christian Tharp, CMT