Choosing the Right Steel Name
- Posted by Greg Harmon
- on April 2nd, 2012
Steel stocks were gaining attention Monday and they may be ready to go. Then again, they might not be. So which ones are the right names to trade? Let’s look at a few of the most popular names.
AK Steel, $AKS
AK Steel, $AKS, looked ready to bounce with a Relative Strength Index (RSI) that has turned higher. It made a higher low last week and will look great if it can get over the jumble of Simple Moving Averages (SMA) at 8.21-8.29. Until then it makes sense to wait. USX, the former US Steel, $X, has a very similar chart but is breaking above those SMA’s now. Of the two it is a better stock to buy today, and if it can get over 32 for the long run as well.
Two other names, Mechel Steel Group, $MTL, from Russia and Arcelor Mittal, $MT, look as if they may be bottoming and ready for a turn. Mittal may be forming a double bottom at 18.50. A move higher over 20 would make it attractive, and Mechel is coming up off of a hammer reversal candle, but really needs to get over 11 before it is interesting. Every one of these steel names may be interesting. Just not today.
It does not have to be this hard, trying to pick a bottom with a chance that is it may shake you out very quickly. And there is no need to be a hero. It is about protecting capital and making money right? If you want to be in a steel name then look for one that has positive price action. I’ll make it easy for you: buy Metals USA, $MUSA. The chart below is not trying to come up off of a bottom. It is not stuck among the SMA’s. In fact it came off the bottom in October and has been stepping higher
Metals USA, $MUSA
ever since. The 50 and 100 day SMA are rising and both have crossed through the 200 day SMA. The RSI is bullish and making new highs. Even the Moving Average Convergence Divergence (MACD) indicator is positive and growing. Today it broke above previous resistance at 14.50. This is a good looking chart. Yes it trades on average only about 150,000 shares a day, but how many are you gonna buy? If you want to buy a steel name, forget the big guys for now and look no further than Metals USA.
I have no position in any steel stocks as of this writing.
If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
- SPY Trends and Influencers March 28, 2015
- Macro Week in Review/Preview March 27, 2015
- Trading the Ratio of Oil Servicers to Oil
- Trading 3 Black Crows, A Hammer and On Semiconductor
- Premium Earnings 3-26-15
- Crabs and Sharks in the Gold Chart: Update
- Designing a Spring portfolio improvement trade in Home Depot
- Premium Earnings 3-25-15
- First is the Worst, Second is the Best….
- Container Ship Stocks are Sailing Higher