A couple weeks ago I wrote an instablog on CLF which you can read here. seekingalpha.com/instablog/6143431-robert-edwards/1679381-i-like-cliffs-natural-resources-because-goldman-sachs-does-not This article is an update of that article.
Based on past selloffs in CLF one can expect a rally of $10 to $12 from any low, similar to what was experienced from Dec. 4, 2012, to Jan. 2, 2013 when CLF rallied from 27.90 to 40.19. The current low is 17.95 unless one counts the pre-market low hit yesterday of 17.90. The 17.90 price is exactly ten dollars less than the December 2012 low. Why can't we have a similar rally now and hit $30.19 in 4 weeks, similar to what happened in December? I expect the rally to begin in earnest next week. Already trading ranges are getting tighter and volume is dropping. The shorts will realize soon that the stock is not going any lower for now and will begin buying to take their profits. When added to the bottom pickers, the buying should propel this stock to the $30 mark in short order. Watch closely when this stock retakes the $20 price level and especially when it fills the gap left from 21.43 that was caused by those Johnny-come-lately downgrades. One can indeed catch falling knife stocks when the falling stops and the stock stabilizes. We are seeing more stability by the day.
Disclosure: I am long CLF.