Don't Be a Meatball While This Arch Builds Its Bunker

Like clockwork, surviving (for now) coal name ACI saw some sellers finally come in after a strong rally at its declining 200-day moving average, the yellow line on the daily chart, updated below. 

Arch Coal has seen a potent "lockout rally" off its penny-stock lows, avoiding the bankruptcy fate that a few of its peers have suffered, instead become and staying overbought on heavy buy volume for the final two weeks of August. 

With the stock down nearly 30% as I write this, the lesson is to stay patient for a potential entry even with a (typically) bullish lockout rally unfolding. 

There is still much to prove in order for the likes of ACI BTU to avoid the Pink Sheets, in terms of a durable, multi-year bottom. Ideally, a three-day bull flag would work after this initial, violent shakeout. 

But as long as ACI hold over $3 in the coming weeks the case for some type of bottoming action is colorable. 

As we are seeing today, though, even a potential major bottoming process can be a painful one for those straying from discipline and chasing up a stock which suddenly seemed unstoppable. 

Let's let Arch build its bunker first.