Metals USA Was Great and Will Be Again Soon
- Posted by Greg Harmon
- on January 7th, 2013
Metals USA, $MUSA, had so much going for it in 2012. Besides a cool name it was the place to hide your money that was allocated toward steel and aluminum as the big names, US Steel and Alcoa cratered in the first half of the year. It just doesn’t go down. Well until now. It just might be time to give it a rest, just for a little bit. The daily chart below shows the long run higher through the first half of 2012, followed by a consolidation, then the current rise from late October. The problem with this stock is that it is now technically overbought. Not just a little, but a lot. The Relative Strength
Index (RSI) which measures the strength of the trend peaked at 85, and is considered overbought when it gets over 70. Monday started the pullback with a Shooting Star candle, and if confirmed Tuesday by a continuation lower would signal a pullback. There is some previous price support nearby around 17 and then the 50 day Simple Moving Average (SMA) at 15.69 near another patch of support with a large Volume at Price bar topping at 15.15 so it may not fall far. A pullback to this area would actually be a good thing. A pullout to the weekly view reveals two embedded Inverse
Head and Shoulder patterns. The smaller green one with a price objective of 23.80 is working fine and a pullback to the 15.15 area would just be a retest of that neckline. The larger purple one is more interesting though. With a rising neckline it is set up too succeed and a retest before it moves up is your entry for those of you that have not been in it.
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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)
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