United States Steel – Follow the Trend?

With a “new deal” in place and auto industry looking for a bailout, many people are looking at steel to have a resurgence in 2009. As many of you already know, that I love the way AK Steel (AKS) looks, but I just might want to add United States Steel (X) to that group.

Before we go further, it is important to note why steel looks like a good play, and why there is still a possibility of it suffering:

• Obama wants to create more jobs by adding infrastructure projects.
• Automobiles looking for a bailout

While the first of the two are probably the most relevant to the success of steel, more bad news from the auto industry can definitely harm the effects of the steel sector. Also, who really knows how effective Obama’s plan will be?

Since I usually tend to make my stock recommendations off technical analysis, that is exactly what we are going to do.

To me, the charts looking pretty nice. Then again a massive decline in stock price can have that effect.

In this first chart, the 50 and 20 day moving average converge, with the stock also breaking a good six month trend. All that in once place? A break surely has to me something good.

From the chart above we also see that the 200 day moving average is flattening out, thus, consolidation done?

As for a price target there really isn’t any major obstacle until $87, but, again, it is hard to spot a real accurate price target when the stock basically plummeted down in value.

If my analysis is not enough, you can also see that MarketClub likes this stock right now too (as marked by the green triangle).

A question was also brought in, how does this compare to AKS?

Any stock that was once near $200 and now sitting at $40 should worry you a little bit. While they can still obviously head much higher, often times it is difficult for companies that have gotten racked so hard to make a clean comeback. Also, for some time now AKS has been having takeover rumors, which would obviously surge the price higher.

MarketClub - Check out a free trend analysis for United States Steel