Steel ETF (SLX)

[TREND1]

Three Steel Stocks on the Move BY ART HILL

The Commercial Metals (CMC) chart is a good example of an irregular correction. The stock surged in November-December and then corrected into early February with a 50% retracement. It looked like a normal correction at this point and the breakout in mid-February appeared to end this correction. The breakout, however, failed and the stock fell well below the 61.8% retracement mark in March.



Even though CMC overshot the typical retracements, it is still above the October-November lows and in the gap zone. The stock firmed for several months and then broke out with a surge in mid-June. Even though CMC fell back after the breakout, I view the higher high as bullish and consider the dip back to the 18-18.5 area as a normal throwback. Watch for a second move above 20 to revive the breakout.

The second chart shows Nucor (NUE) with an extended correction that still looks normal (50-61.8% retracement and falling channel/wedge). The 50-day EMA is above the 200-day EMA and NUE is battling to hold the 200-day EMA. The high volume decline in mid-June looks like a selling climax of sorts. Notice that upside volume picked up immediately after this selling climax as the stock rebounded. A break above the mid-June high would be bullish.



The third chart shows Steel Dynamics (STLD) with a long drawn-out correction from mid-December to June. The channel line and June highs mark resistance in the 36-37 area. Look for a breakout here to signal an end to the correction and resumption of the bigger uptrend.