Thinking about stealing some profits from the market? Let’s look at the steel sector. (February 24, 2016)
X DJUSST CLF DJUSST X CLF DBC
I had planned on just showing you US Steel ( NYSE:X ), but I’m going to go a little bit deeper than that. The reason I’m talking about this, I’m looking at this, the steel stocks have looked like they were bottoming, we’ll take a look at that in a second. It’s a $7.73 stock so you can trade it like “thousandaire”. But you can see how this has not been able to get above the 50-day moving average, which had been trending lower, unable to get through there. Unable to get through there, on these two times that it really tried. Then finally, got through it, Oh crap! So this had still been holding. But look at the slope. See down here, and then by now, Boom! Straight across. So the slope of the 50-day moving average has flattened out, which makes it all the more important; all the more meaningful that this stock has pushed up above here, not just once, but fallen back to a higher low.
So we’ve got here, then we got a lower low, then we have a higher low. So it didn’t just push above the 50-day moving average once, but it pushed above it again in a more meaningful way, like big volume. And now just today, pulled back down below the 50-day moving average. Watch what happens when I clean up this mess. Boom! Just like that. It fell below the 50-day moving average and then is now trading higher. This is a hammer pattern. It’s a pretty compelling pattern in a stock that is still in a base. It’s still basing but it’s starting to move higher. Okay, let me look at some of this other stuff, all commodities and metal related. The Steel Index ( INDEXDJX:DJUSST ) where it’s seeing a similar thing, so it’s not JUST US Steel ( NYSE:X ). Then we look at Cliffs National Resources ( NYSE:CLF ), this is another one. You could REALLY trade this like a “thousandaire”, $1.86. Above the 50-day moving average, had been in a steady downtrend. So I’m looking at this, again, above the 50-day moving average.
You’re looking at US Steel Index ( INDEXDJX:DJUSST ), above the 50. US Steel ( NYSE:X ) finally. So we’ve got the US Steel ( NYSE:X ), the Steel Index ( INDEXDJX:DJUSST ), and Cliff ( NYSE:CLF ), all trading above the 50. Okay, lets just look at commodities in general ( NYSEARCA:DBC ). These things are in a real volatility squeeze. This isn’t in an uptrend yet, but man, would you want to short this thing right now? I wouldn’t. This is about to breakout above the 50-day moving average as well. So what I’m telling you is, you REALLY want to keep an eye on these metals. You can own them too, certainly, I own some. But commodities, this is kind of inflation really. Commodities are still trending lower, it’s in a downtrend, only a fool would dispute that, but downtrends END at some point and they end in one of two obvious ways, (1) They would end in a big whoosh down and back up. We saw that three different times in 2002, 2003, with the S&P. The other way they can end is in these basing patterns like this.
So we’re definitely not in whoosh down and whoosh back up. But this could be a base. All we need is to start trending above this 50-day moving average. You’re going to hear a lot more folks on CNBC talking about commodities, talking about steel, talking about copper, I won’t go into that now. I want you to be focused on this stuff. Keep an eye on this DBC ( NYSEARCA:DBC ), it’s plenty liquid, you can buy this if you want, or some of those steel stocks, because I think they’re working.
Free Chart