What is everyone going to be talking about next week? Steel stocks. Here are some bullish setups that should work. (April 23, 2015)
I’m going to talk about stuff that nobody talks about, steel. Everybody’s all lathered up about the different stocks of companies that have announced earnings: Starbucks ( NASDAQ:SBUX ), Google ( NASDAQ:GOOGL ), Amazon ( NASDAQ:AMZN ) and stuff like that, as well as Apple ( NASDAQ:AAPL ), which is going to report earnings on Tuesday.
But look at steel, look at the steel index ( INDEXDJX:DJUSST ); you’ll hear about all of this next week, I guarantee you that you will, because these companies, which I’m going to cover, are all reporting earnings on the 28th, that is next Tuesday. I think I misspoke, Apple ( NASDAQ:AAPL ) reports earnings after the market closes on Monday afternoon.
So all these companies report earnings on the 28th, on Tuesday, but look at this setup on these stocks. These are really, really nice trade ideas, good potential trades here. Look at US Steel ( NYSE:X ), it’s steel, they’ve been absolutely taking it in the shorts, by the shorts, on a big move down. Since this higher low the stock has moved up quite a bit, but it’s off of it’s recent high, so this is a nice little tight consolidation with support at about 25.00.
Look at the others, Cliffs Natural Resources ( NYSE:CLF ), support at about $5.00, this is close to breaking out. These are stocks that I would make an argument that they have, as I say tongue and cheek, gone down enough. And the reason I say that tongue and cheek is because who am I, who is anybody to say when a stock has gone down enough? You look at this, Cliffs Natural Resources ( NYSE:CLF ), 47 percent of the float is short, 47 percent. That’s a pretty big short interest.
If I was a betting man, and I just probably will bet, if I was a betting man I would look for this stock to pop to the upside almost irrespective of what earnings are, just because of the high short interest. Now, AK Steel ( NYSE:AKS ), lets take a look at that; short interest is not quite so high, only a third of those shares are short. This is another one where it looks like it’s in a nice basing pattern. You know you’re going to hear that the economic recovery is kind of slow and all that kind of jazz; but you look at these stocks and they look poised to move up after earnings. Same thing with US Steel ( NYSE:X ).
So look at US Steel ( NYSE:X ), Cliffs Natural Resources ( NYSE:CLF ), and AK Steel ( NYSE:AKS ); look at these stocks as you anticipate what you’re going to do next week. Consider buying these stocks, don’t buy all of them, you’re not diversified, but consider taking a position in these stocks before earnings are reported, if only because the short interest is so high.
Remember what happened to Angie’s List ( NASDAQ:ANGI ); really, really high short interest, I think the company actually made money. Wow! Then the stock popped and then promptly sold off for the rest of the day. So when you look at AK Steel ( NYSE:AKS ), when you look at Cliffs Natural Resources ( NYSE:CLF ), when you look at US Steel ( NYSE:X ), you don’t ask yourself where will the stock be on Wednesday? You ask yourself, where’s the stock going to be immediately after earnings? And is this a stock then that pops and I can sell into it and make a nice profit?
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