Prepare for the short sqeeze in the coal complex

I do not know if the gains will hold through today's trading, but the coal stocks are catching a strong bid in the pre-open market. This is on better-than-expected results from Arch Coal (ticker ACI, owned in the trading model portfolio and in portfolios I manage). The company reported earnings of $0.22, a full $0.35 ahead of the consensus estimate for the third quarter, on a significant sequential improvement in coal shipments, which is all Powder River Basin shipments.

I have only taken a rudimentary look at the earnings report so far, but just given the earnings, the technical setup, and the short interest. We could see some significant gains out of the stock today and going forward

The stock has retraced 61.8% of the gains coming off the October 4 lows, and has pushed into October 11 updraft with 27.8 million shares versus 32.3 million, suggesting to me that the pullback is just natural a retracement of the up move. This setup suggests that $10 per share is in the cards. Lastly, the technical setup does not consider that more than 30% of the float is sold-short. A short squeeze could really get this moving to the upside. Only time will tell.