Short: MTL
Despite a negative market today, I am using the rally in [[MTL]] to begin a short position at 100.30. It is rallying because of its coal output and that the coal sector is hot. I don’t expect it to take out its old high, although certain elements of the chart look OK (volume, RSI, MACD). My stop is above the all-time high.
The stock was upgraded yesterday by Credit Suisse to Outperform, but I remain unconvinced at this price that it can run much further. The best entry time to short would be to wait for a break first, though I am willing to front-run this one, given the limited downside. A good rule of thumb (not law, mind you) is that a stock peaks (sometimes temporarily, other times permanently) when it is up ~100% from its 200-day MA. You can see that point essentially marked the top twice with MTL.
No offense, but that looks like a pretty stupid trade. Commodities outperformed on Friday against all other industry groups and the DOW and NAS haven’t even begun their dead-cat bounce yet (which could carry into next week before we turn south again).
As a matter of precedent, CLF (a steel stock with an earnings rank of 64 as per IBD) hit fresh 52-wk highs on Friday. MTL (with an earnings rank of 88) initiated a surge on above avg. volume and is likely to at least hit new highs. I’d say the odds are pretty good that you’re gonna get stopped out.
February 9th, 2008 at 3:38:40 pm[...] made a bad trade the other day I wanted to [...]
February 11th, 2008 at 1:52:34 pm