Whitehaven, a prime target of the environmental protest movement, and New Hope, a company once treated with disdain by its major shareholder, have outperformed just about every other listed company with rises of 18% and 12% respectively since the start of July.

Whether the dynamic duo can continue to regain ground lost during the great coal sell-off of the past three years is uncertain because while the share prices were rising the price of coal was not.

So, what’s going on there? How can share prices go up when the price of their underlying product is not?

The answer is simple, and well known to most investors because what the stock market is signalling is an expectation of better times ahead.

In an ideal world (if there is such a place) share prices generally reflect earnings and prices some six-to-nine months into the future. They never reflect the past, because investors only use that as a reference point, or a guide as to whether prices are going up, or down.

In the cases of Whitehaven and New Hope, two of the last significant, independent, coal miners listed on the ASX, there is reason to be optimistic, but not excessively optimistic.

What might be happening is that the share prices of both companies are playing catch-up after having been “over-sold” as coal prices crashed. Perhaps investors are seeking to find “fair value” for both.

Whatever the explanation the key point to the rise by Whitehaven and New Hope is that some investors believe that a bottom in the down cycle has been reached and that this is a good time to soak up shares in a pair of companies (and an industry) that has only one way to go, which is up – if only because it is becoming difficult to fall much further.

One of the turning points for what has been a largely unrecognised revival was the fourth-quarter production report from Whitehaven. That report revealed how coal output from the company’s mines had risen, and how work on the big Maules Creek mine had reached the half-way mark.

In the words of Macquarie Bank the Whitehaven result was a sign that the company was “finding a floor” with saleable coal production 10% above what the bank expected and full-year production guidance also ahead of expectations.

The net result was that Macquarie added Whitehaven to its buy list, forecasting that the stock would rise over the next 12-months from $1.48 at the time of the report being written to $1.79 – which is almost where Whitehaven has risen to with recent sales at $1.70.

New Hope, which is one of the most under-researched companies on the ASX, has not attracted the eyes of mainstream investment banks. It did, however, attract a specialist research firm called StocksInValue, which noted in a report that the New Hope coal train was “leaving the depot as gloom lifts”

For the Australian coal industry, which has been under attack from a number of directions, including financial markets, governments, and environmental protest groups, the latest developments on the stock market are welcome news, and a continuation of the better times noted in last week’s dispatch from The Hog, The rising demand for coal.

But, whether they are a pointer to higher coal prices is uncertain with the best explanation for the positive stock market news being recognition by investors that they had overdone the coal-miner sell-off and that a bottom in the coal market is forming.

Other early signs of improving market conditions include the decision by India’s Adani group to take another step towards developing its big Carmichael mine in Queensland’s Galilee Basin by forming a joint venture with Korea’s Posco and, perhaps the most interesting of all, the effort of Nathan Tinkler to get back in the coal game.

Not liked by everyone in the coal business because of the problems he caused for Whitehaven what Tinkler is good at is spotting under-valued assets and trading up as prices rise.

This time around he might be a bit early, but the fact that a serial asset-trader can smell a bargain (even if he seems to be struggling to finance his deals) is a sign that he reckons higher prices are on the way.

Interestingly, given what has just happened to the share prices of Whitehaven and New Hope it seems that Tinkler is not alone and other earlybird speculators are taking up positions at the coal table in expectation of better times ahead.

Hopefully, they’re not all engaged in a spot of premature speculation.