TLDR
Most bullish steel market in 100 years. Buy the hated, shorted, long term laggard with the most leverage on steel prices now. CLF calls, shares, whatever you want. Target $22+, 30+ with a short squeeze.
Who the fk am I?
I am a stock and options trader with a focus on steel stocks going back to 2021. I decided to go with this industry because the focus is how you win and I also have access to industry sources. The North American market is basically an oligopoly that is now market protected and most global countries now have tariffs on China which historically has polluted the world with dumped steel - destroying industries all over. I called Nucor in 2021, the U.S. Steel buyout in 2023 and again when fully approved, MT this year to name a few big plays. Check my post history if needed. I also swing trade tech and dabble a bit in miners. For my day job I sell software though I was a commodity trader at an investment bank and at a small private fund at some point.
Technicals
Daily Chart: Higher lows, building towards a breakout
https://preview.redd.it/hhek5ud1scvh1.png?width=2048&format=png&auto=webp&s=107a18f0093d2300de67194815cc5f16ae0f007e
- Weekly Chart: Massive years long wedge is about to see a breakout. Expect a monster move.
https://preview.redd.it/r4upnfb3scvh1.png?width=2048&format=png&auto=webp&s=b69c038103264223660ab8a09ed262143ca51cf2
- Monthly Chart: You can clearly see the massive wedge going back to 2022 and the stock much higher previously although the company as it exists today didn’t happen until 2020/2021 when they acquired steel assets.
https://preview.redd.it/g3of6hq4scvh1.png?width=2048&format=png&auto=webp&s=6fadbcbbc94ef3a8b121616e84b487ba9d211245
- IWM (Russell 2000) looks like it is finding support here. It is crowded short as well.
https://preview.redd.it/6xegsywhscvh1.png?width=2048&format=png&auto=webp&s=a33df58b908af10428f47c74534e01e7a8cc612c
- SLX (Van Eck Steel ETF) Looking constructive
https://preview.redd.it/m63unz6jscvh1.png?width=2048&format=png&auto=webp&s=ca354e83820b18e984e78706ae41975cdb47b707
- Nasdaq and AI trade is looking a little tired and we could see rotation. Though if the entire market simply rallies obviously I won’t care.
- Nasdaq is crowded long and IWM is crowded short.
- Treasury bonds are crowded short as well
- Crude Oil is looking under control as the U.S. Navy is escorting oil out of the gulf. Everybody calling for $150+ crude appears wrong.
- The CLF market cap is currently only 7.35 billion so it has a lot of room to run with momentum and institutional investors and traders rotating out of multi trillion dollar Nasdaq names.
- CNN Fear index recently entered neutral from a period of fear starting 9/2. I expect greed and extreme greed later.
Fundamentals
- This is the most bullish steel market in North America in 100 years. It is better than covid because it is structurally bullish due to the 50% tariffs and onshoring. COVID had higher prices but it was a relatively short lived supply shock - though it kept the market on a bullish trend for several years.
- GDP + 2.2% in Q2 and accelerating
- Manufacturing PMIs are the strongest in years. Here is the ISM manufacturing PMI. I won’t bore you with the others but they all look fantastic.
https://preview.redd.it/n7x7fekkscvh1.png?width=2048&format=png&auto=webp&s=71e5964e38e6a992a66c14bc7ecea68aa0dae73e
- Here is a chart of HRC(hot rolled steel) prices. Good proxy for general steel prices as there are different types - some more processed and refined etc. CLF is the largest rolled steel producer in North America. Notice they are going up at least $10/week. This doesn’t look like a chart you short. Steel Tariffs are currently 50% and it doesn’t look like they are going anywhere.
https://preview.redd.it/xo7wb6rlscvh1.png?width=2048&format=png&auto=webp&s=2008eb241c37b6aeaf4773e1a4b8d8669c844af7
- Cliffs is lagging the other steel companies the last 5 years primar