I constantly here the phrase "Follow the smart money", as the "Smart money" represents the people who set the prices in the market.
Anyways, I recently read the following:
Finally, Goldman Sachs lifted its rating on U.S. steel makers to "attractive" from "neutral." The brokerage firm cited the sector's underperformance and the emergence of "incrementally positive data points." Goldman also said that, "Steel and scrap prices in the U.S. have bottomed in our view, Chinese prices are rising, inventories remain low, a weak dollar has brought the U.S. close to being a net exporter, and we expect better industrial and auto demand in 2010." It added U.S. Steel (X) to its "conviction buy" list, and said its favorite stocks are Steel Dynamics (STLD), AK Steel (AKS), and Nucor (NUE). Goldman also removed Freeport-McMoran Copper & Gold (FCX) from its "conviction buy" list.
With that said I am looking at initiating a position in STLD, not sure how yet, but I will keep you posted.
I ended up selling just 3 put contracts on this STLD at the $17 stike with Feb '10 expiration. That gives me 82 days for this position to play out.
ReplyDeleteMy break even on this play is $15.30 (17-1.7 premium Collected). I am lookig at the three month daily chart and managing this position based on the 15 day ad 50 day moving average. On Novembe 25th the 15 day moving average crossed the 50 day. So I will remain i this position as long as the relationship holds true. I also notice some support building at $16 with the first level of resistance at $17. Looking at the chart this thing my have room to 18 by Feb.