A Possible 50% “Breakout” is Coming for Steelmakers
The steel rally we’ve been expecting is starting to firm up… just look at the price action in “MT.”
In late August, we noted how companies that produce steel to build skyscrapers, cars, bridges, and power lines are among the greatest “boom and bust” assets in the world. They soar and crash as the global economy fluctuates. These companies also have thin profit margins… which adds to their volatility.
It’s easy to see this volatility through shares of the world’s largest steel company, ArcelorMittal (MT). Like most assets, MT was hammered in late 2011. Shares fell from their summer level of $35 to $15 (a 57% haircut). But the broad market action has turned bullish, and beaten-up MT has bounced off its lows around $16… The stock is now poised to “break out” to new multi-month highs around $22.50.
We can’t know how long the economy will stay “half full” and push up stock prices in general. But we can say that the trend is currently up. This could produce at least a 50% “bad to less bad” rally in MT and its fellow steelmakers.