Trading Idea - Momentum Buidling in Massey

Published on Tuesday, 16 March 2010 18:32 Written by Christopher Lynn

New York, March 16th (TradersHuddle.com) - Shares of Massey Energy Company (NYSE:MEE) closed the trading session at $50.22 placing the price action in a very tight range, given that calculated support is set at $48.22 and the calculated resistance based on an algorithm of peaks and troughs is set at $51.06

Massey Energy Company (NYSE:MEE) produces, processes, and sells bituminous, low sulfur coal of steam and metallurgical grades. The Company currently operates coal mines in West Virginia, Kentucky, and Virginia. Massey provides its coal to utility, industrial, and metallurgical customers.

Massey's stock price action indicates that both sellers and buyers are materializing very close to each other, which is indicative to a momentum building area, as the stock can resolve by breaking out of the tight range that developed.

Traders wanting to establish a position should place close attention to Massey's price action, as any movement outside its predefined range of $48.22 and $51.06 could grab the attention of momentum buyers, looking for a big movement in the price of the stock. Traders need to be aware that tight range resolution works both ways, hence, a move below support at $48.22 could spark above average selling. A tiered approach can be a good way to approach starting a position in Massey's, by establishing a starter position while the stock is in the tight range, and then adding to the position as it breaks and closes above resistance.