A catastrophic drop in commodities led by crude may be crippling growth in some companies, but the lower prices are providing cheap inputs for others (and better margins). One of those industries is steel, which has long been under the protection of high tariffs against other countries like China. Those tariffs were put in place at the turn of the century, giving our steel companies a nice pricing advantage. As a result, steel enjoyed robust growth and a renaissance of sorts from their days as a dying sector.
However, the group has recently suffered from lower demand for products and product dumping by other countries. Prices have started to firm up lately and that may actually be the key to showing some growth.
US Steel (X) is one of the oldest companies in the group, and it has been on a rollercoaster ride. The stock has started to rebound, and the recent earnings pop has held the stock higher as the rest of the market churns. See the chart to the right and video below.
We have some good price action and solid volume, and the indicators have started to turn upward. I like the solid relative strength and one more day (Tuesday/Wednesday) with a higher high and higher low on the daily chart confirms the breakout. We added some March 24 strikes earlier in the month, as we are looking for a target near the 200 ma (around $30.65).
The group has been rallying, but US Steel is one of the best names in the group. We should see some higher prices over the next several weeks, but we will be patient and let it work. As our chart of the week, we look for US Steel to be the one.
US Steel Analysis
Take a deeper dive into the chart action as I walk you through the US Steel chart and my technical analysis.
Don’t miss a single video! Get the latest chart action delivered directly to your inbox every week!
