Most of the leading steel stocks topped out in April 2010 with the stock market. However, since late August the stock market has surged higher as the U.S. Dollar Index has declined. Most commodities such as gold, silver, copper, and oil have made new highs for the year. Unfortunately, the steel stocks have lagged the market and remain near the low end of the range since the July 2010 lows.
U.S. Steel Corp.(NYSE:X) is considered the leading steel stock in the sector. Today this stock is trading lower today by $1.09 to 43.79. In early July, U.S. Steel Corp. was trading down around the $37.00 level. The stock did rally with the major indexes from that market low, however, the stock peaked on August 19th, 2010 around $51.00. Therefore, the stock has now fallen back into the middle of the trading range from early July. This lazy sideways action comes in the middle of a major inflation rally spurred on by the Federal Reserve Bank. The markets have gone bananas since the so called quantitative easing part 2 was announced. This stock must be watched closely should these markets begin to decline or sell off. U.S. Steel Corp. would be a good candidate to lead the decline due to it’s weak relative strength. U.S. Steel Corp. will have daily support around the $40.50 level.
Other leading steel stocks that have showed weak relative strength are AK Steel holdings Corp.(NYSE:AKS), Nucor Corp.(NYSE:NUE), and Steel Dynamics Inc.(NASDAQ:STLD). This sector must be followed closely as it could lead the stock market lower should this current inflationary rally come to an end.
