What's wrong with X? It's been trading like a POS on a downtrend since hitting 52-week high recently. Is it factoring in all the bad news before earnings?
IMHO, a better question is "What's RIGHT with X?" Why should a company whose earnings projection for 2009 is -10.29 per share and whose earnings projection for 2010 is .96 per share ever have been trading at 25% of its all time high in 2008 when its earnings were 18.24 per share??? The market never fails to amaze me with its irrationality, but I'll trade anything that moves if it winks at me from across the dance floor in an enticing manner.
Oh, come on! It was one of the few companies which actually had positive earnings, you know... not "ex-items". It's a hell of a trading vehicle, my daily net loss limits are just far too restrictive to trade it much at all.
Nice target zone; it actually made it to $33.25. This morning's news: "United States Steel Raised To Buy From Hold by Keybanc Capital" I ask the market professionals here: Why? Why? And why? In 2007 they earned over $11.00/share and were trading around $50. In 2008, they earned $18.24/share and traded at an average price of $150 while the bubble was at its peak before the crash. 2009 "earnings" are -$10.35/share (yes, that's a negative), and 2010 projections with the massive economic growth the global economy is expecting is .98/share. So why, at the current price of nearly $50/share, are they a BUY? Are P/E ratios of 50, 70, 120 the new "normal" for companies that aren't novel and unique with high barriers to entry? Don't tell me "who cares, just trade the tape". I know that and as a trader I really don't care why price goes where it goes, but as a student of the markets, I'm very curious why X is a buy near 52-week highs and at the price level it traded when it earned $11.00/share, and for that matter why commercial REITS are currently trading at P/E ratios of 90 and 120???
my analysis of x says that we head lower in coming days. Not only did we close on a pin bar yesterday, but looking at forks, a rare but usefull tool suggest that price follow the red fork down to 41 to 42 area. While its up 225% ytd, i think a pullback here is due.
OK, now my curiosity is piqued out of bounds. I looked at STLD and AKS, trading at 18.00 and 22.00 respectively. STLD 2010 earnings projection is 1.32; AKS 2010 earnings projection is 1.22. X 2010 earnings projection is 1.09 and it's trading around 56.00. What gives?
On the weekly chart, X broke out above resistance (low 50s), and it's been on a tear for the last 6 weeks. Doesn't appear to be a whole lot of resistance until the mid-70s, but it has been on diminishing volume over the last 3 weeks, which is one thing which makes me question how much stamina it has left. I also wonder if the gap up today was designed to give the shorts a better fill because it certainly filled quickly and didn't look back all day. I see us pulling back to the $53 area (or maybe even $50) if the market is weak for the next couple of days. If we get back about $58, I'd say there's more room to the upside. I'm so befuddled on how earnings are working these days that I'm just ignoring them, sticking with the charts and staying flat ahead of them. One thought might be that since X deals in a primary infrastructure commodity (steel), people are betting that a turn around means an increase to the glory years and doing a little bargain hunting.
I agree there is plenty of room for upside, but I still have to wonder what the attraction is for X vs. STLD or AKS,expected to earn more per share and priced less than half of X. I guess it's strictly being traded off technicals...higher price, more movement.
Yeah, I don't know...STLD and AKS have a lot less cash in the coffers, so maybe it's a durability perception on who can survive a downturn. STLD is only about 65% owned by instutions where as the others are over 80%, so there could still some upside to STLD if their cash situation improves (yahoo only showed $8 million vs 1.5 billion for X and $300 million for AKS). Just speculation here, though.