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Shares of Patriot Coal Corporation (PCX) soared by more than 30% on Thursday despite the lack of any major news. This move comes after PCX rallied more than 30% in the previous trading session.

(click to enlarge)PCX ChartPCX data by YCharts

Evidence Of A Short Squeeze

One reason why I believe the recent move in PCX has been a short squeeze is the lack of a major move higher in other coal stocks with the exception of James River Coal Co (JRCC). Interestingly, the only coal stock with a higher short interest than PCX is JRCC.

(click to enlarge)PCX ChartPCX data by YCharts

While all names in the coal sector have moved higher, PCX has rallied much more than any other coal stock. JRCC is second by a healthy margin.

Short Interest

As of June 15, when short interest was last reported, short interest in PCX stood at 25.48 million shares or 28% of the float. What has likely been behind the rally over the past few days is short covering.

Sector Short Interest

  • James River Coal Co : 47%
  • Patriot Coal Corp : 28%
  • Alpha Natural Resources (ANR): 10.5%
  • Peabody Energy (BTU): 3.2%
  • Consol Energy (CNX): 14.6%
  • Arch Coal (ACI): 19.2%

My Take

My view of the stock remains unchanged. I believe it is too risky and would rather own higher quality coal stocks.

While my own view of PCX has been too cautious, I would like to point out fellow Seeking Alpha Contributor Mark Anthony who wrote a terrific bullish piece as PCX was hitting new lows just days ago. His call has been spot on.

Source: Patriot Coal: What A Short Squeeze Looks Like