Alert: Steel Stocks Break Out
Steel stocks are surging today on the back of renewed optimism for the global economy. China's inflation numbers overnight, showed signs that may halt the governments need to raise interest rates so aggressively. This is bullish for growth expectations in China. With growth comes commodity price increases. United States Steel Corporation (NYSE:X), Nucor Corporation (NYSE:NUE) and AK Steel Holding Corporation (NYSE:AKS) are all spiking higher. U.S. Steel is trading at $62.72, +2.37 (+3.93%).
Solid gains across the sector have broken key resistance levels on many steel stocks. Namely, U.S. Steel has broken out above the $61.00 level. The stock has been hammering on this level since the start of January. The gap higher today looks to have broken the barrier. The next major resistance level on U.S. Steel is at $66.40, followed by a major double top at $70.50. Both levels are now a possibility in the not too distant future. At this point, shorts on the stock would be foolish though longs must be very careful. The key would be to wait for consolidation to buy and then once the resistance levels hit, short.
Note the chart below. It shows the resistance level that was broken and the two upper new resistance levels.