Four Potential Weak Links as Steel Sector Loses Momentum

I noticed quite a few steel stocks showing up on my scans that indicate weakness, or could potentially be losing momentum. In fact, when the steel industry turns around, it often precedes a stock market bottom.

Since we just “officially” entered a recession I doubt that this sector will be turning around any time soon as people are still having trouble getting credit and I doubt any major construction will go on for some time. Most every commodity out there has been hit hard which is hinting more of a deflationary setting for the time being and with steel being a commodity, it makes sense that this sector should under-perform.

If the market does move lower these should be some of the fastest moving stocks to the downside so keep an eye on them.

Sees long recession through next year

Warned of falling demand

 

Comments

[Kelvin Schulle:]

Jeff,
your arguments are really out of date, if you said these 1 month ago, people will agree. With steel stocks down so much in one month, most of them are trading at 5 year low! snap back rally will be huge. don't forget the coordinated global government spending is unprecedented in one century. the spending will be on infrastructure. Resources stocks and steel stocks are likely coming back quicker than you thought. it is really time to buy those stocks X and CLF and others. CLF is extremely attractive, one china huge contract will send it through roof again. US steel easily 100% from here. don't you see volstwagen rally last week? even Goldman sacks got killed, (GS shorted VW)

last thing. election changes everything, fundamentally. if you short, better cover(actually every single stock), my advice.

2008 Nov 02 06:59 PM

[jdh0258:]

Kelvin,
Care to bet our house mortgages on that?

2008 Nov 12 08:13 AM

[Jeff Pierce:]

All 4 of those stocks mentioned above were down double digits today alone, and that's not counting the previous few days. Catching a falling knife can be difficult to rebound from. Trust me, I've tried it early in my trading career.

2008 Nov 13 02:11 AM

[capital pains:]

These were "knives" lucky to be caught at the time this article was published. Just more proof that prognosticators aren't worth much at all. Actually prognosticators are "falling knives" that should continue falling. Do your own research folks...Steel has had a parabolic move
since this article..Crazy ? Yes indeed ..But, who says the market is
rational...The famous adage: "The market can stay irrational longer than you can stay solvent" !!

2008 Dec 11 12:54 PM