Two steel stocks have recently reacted well to earnings. They both have gapped higher on above average volume indicating a potential change in trend and sentiment. Technically speaking these two have the greatest odds to be the new leading stocks in steel. The two stocks I am talking about are STLD – Steel Dynamics and X – United States Steel. I have positions in both stocks. This looks like another ABC pattern in the making. The blue lines I drew into the chart show the typical initial thrusting move caused by a catalyst like earnings, a subsequent consolidation period, clearly visible on the STLD chart. Then the highest odd outcome, which is the resumption of the trend of the initial thrusting move.
The chart clearly shows how STLD and X are outperforming their peers. As a general rule outperforming stocks tend to attract a lot more money as traders focusing on momentum, growth stocks and technical trading prefer to put money at work in leading stocks.
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Chart contains: SLX – Steel ETF, STLD – Steel Dynamics, X – United States Steel, AKS – AKS Steel, NUE – Nucor, ATI – Allegheny Technologies
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The weekly STLD – Steel Dynamics chart shows a small gap in the 25$ area that could act as a price magnet. The 25$ area looks like a reasonable price target for STLD.
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