Steve's note: I usually stay away from "this is the best ever" kinds of claims, but I can tell you if you're interested in short-term trading, Jeff Clark is the single best trading advisor in the business today. 

Jeff has an incredible knack for finding quick trades that have the magical "cheap, hated, uptrend" thing going for them. And he agreed to let us publish a recent essay he wrote on... 


If you liked the action in the oil stocks over the past three weeks, then you're going to love what's coming next... 

Earlier this month, I turnedbullish on oil. The sector has gone nearly straight up since then. My readers made a series of low-risk, high-reward trades we closed out for double-digit gains in just a week. The oil rally is now getting a bit long in the tooth. It's not over... But the risk of buying into the oil sector for the chance of a quick gain is not worth the potential reward.

Here's an updated look at my favorite oil stock indicator...




This chart shows the "bullish percent index" for oil stocks. It's a momentum indicator that acts as a sort of rubber band. When an asset gets badly overstretched to the downside or upside, chances are very good it will snap back. 

The chart triggers a "buy" signal when it drops below 10. As you can see from the blue circle in the bottom right-hand corner, we got a super buy signal a few weeks ago. It didn't last long... and the rubber band is snapping back.

We don't have a "sell" signal from this indicator yet. But oil stocks have rallied so far off the bottom, there's probably more downside risk than there is upside reward. So only short-term traders should venture into the oil patch.

Fortunately for everyone else, another sector is ready to make a move. Coal.

Coal stocks have had a wild ride over the past year. After peaking near 750 last July, the Dow Jones Coal Index dropped to a low near 110. Since then, it has waffled back and forth between about 130 on the downside and 200 on the upside. Take a look...



The index itself is consolidating, and it'll take a move above 200 to spark a bullish uptrend. Several of the individual stocks that make up the index broke out to the upside last week. So the odds are high the index will break out as well. 

Yes, I know President Obama hates coal. I know the hippie down at the coffee shop hates coal, too. But the market is the only thing I'll listen to. And my research tells me the market is getting ready to fall in love with the stuff.

Longer-term, I'm still bullish on oil stocks, and on just about everything else in the energy sector. But if you're looking for a great trade for the next few weeks, you have to check into coal. It's despised by most people. It's beaten up and cheap. And the chart shows a rally just waiting to happen. 

From a risk/reward perspective, this is the number one trade in the market right now. 

Best regards and good trading,

Jeff Clark 

Editor's note: Jeff Clark is a regular contributor to DailyWealth, a free investment newsletter focused on the world's best contrarian opportunities. We write with a simple belief in mind: You don't have to take big risks to make big money with your investments. 

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