I am not going to include a chart of Cliffs Natural Resources, Inc. (NYSE:CLF) as any serious investor needs to get used to checking out charts on their own. I would recommend that they go to Yahoo Finance and enter the symbol and select the Max time interval which will show where the stock traded going back to 1987. What is interesting to note, is that this stock traded under $2.00 in May 2003, nearly ten years ago. But by June 2008, in just over 5 years, the stock hit $120. Not many stocks make you 70 times your money, turning $10,000 into $700,000 in just over 5 years. Then the stock plunged to $15 by February 2009, only to rally again to $98 in March 2011. Last December the stock hit a low of $28.50, only to rally a month later to $40. Now the stock plunged to another low, and trades with a $23 handle.
A BOTTOM IS NEAR
I don't know if we are at "the" bottom, but at least a short-term bottom cannot be far off. I would recommend that you go to StockCharts.com (it is free) and punch in CLF and select weekly charts. I choose to view candlestick charts myself, and save my settings on my computer along with various technical indicators I follow. What is striking when one looks at the weekly chart of CLF over the past three years, is how $45 was support in the summer of 2010, a low in early October 2011, and also for several weeks during the summer of 2012. The stock fought valiantly to stay above $45, but finally had to give in to the downward pressure. It bounced first off $35, back to $44, down to $32.50, back to a $45 double top, down to $28.50, back to $40, and now down into the $23 area. Wherever we bottom in the next 2-4 weeks, I expect for us to fight our way back to something close to $34, if the past bounces are any guide.
YOU CAN START BUYING AFTER FIVE STRAIGHT DOWN WEEKS
Last Friday we closed down for the fifth straight week, closing at $24.73. This week we are down another dollar, and are trying to paint another red weekly candle (6 in a row). We are extremely oversold by any measure and although we may not bounce starting tomorrow, one can start accumulating under $24, buying more shares every drop of 25 to 50 cents. I expect this down leg will stop between $22.50 and $23.50, then bounce to $28.50 to $30, and then maybe drop down to $17.50 or so, in a final plunge bottom, from which we should get a significant rally all the way back to $34. The way Cliffs Natural moves, we could bounce up to $30, down to $17.50 and move back to $34, all within the next 4 to 6 weeks.
LONGTERM TARGET OF $76
I have picked CLF to possibly be the sleeper pick, stock of the year for 2013. We have already hit a 2008 peak of $120, and a 2011 peak of $98. I am looking for a Spring of 2014 peak of $76. Why not?! Who would believe after hitting $120, a few months later it would trade down to $15, only to hit a $98 peak, three years following the earlier peak. Three years out projects another peak in 2014, and coming in another $22 lower then $76 should not be hard to do. There is a lot of resistance around $75 that was tested in early 2012. When the shorts finally cover, and hedge funds decide to get back in CLF, the sky is the limit to where this high flyer can soar to. I consider this stock a day trader's dream with volatility to spare. It is not easy owning this stock when it is trading above $35, but below $30, and especially below $24, as it is now, anyone who accumulates the stock on dips should be richly rewarded....probably sooner rather than later.
Disclosure: I am long CLF.