If there are any TSC members affected by the recent weather disasters, please stay safe! I know there is a member in Texas and also in Florida. I hope they were able to avert any disasters on their homestead. Prayers be with you.

I heard the President of the United States rating was up due to his response and relief efforts for the natural disasters.

Let’s turn now to the charts and see how the POTUS ratings fare on a group of stocks called “Trump trades”.

For those not familiar with the term “Trump stocks” or “Trump trades”, there was a group of stocks early in the rally after the presidential election results were announced in November 2016. US Steel (X) was one of the stocks in the “Trump trade” stock group. But after giving back most of the gains since its rally after the presidential election, some may be wondering if US Steel (X) is still a Trump trade.

To answer that question, I will review a sample of candlestick charts of varying lengths for this US Steel (X) chart analysis. Maybe his approval rating can be bumped up a little more if the charts look bullish….

US Steel (X) – Long-Term Trend Review

This first chart for US Steel (X) is a 5 year monthly candlestick chart. I always like to look at the longer-term trend for a stock before I go diving into the details of a weekly or daily candlestick chart.

The green supporting trendline underneath X’s share price is one area where a scale-in purchase could be made to go long (this is a chart from yesterday’s close because that’s when I started this article).

On the above chart, I’ve illustrated what I think are Waves 1 and 2 in a large Bullish Impulse wave pattern. Wave 3 could be currently in process. Remember, according to the characteristics for Impulse wave patterns, Wave 3’s tend to be the strongest and longest of the waves in the pattern.

Here are some of the items that support a Bullish Impulse wave pattern:

• X has seen some above average, heavy buying volume the last 3 months[s2If !current_user_can(access_s2member_level1)]….

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I continue to review the bullish items on its longer-term chart as well as calculate some very bullish upside price targets.

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• The buying momentum reflected on the MACD Histogram is long-term buying momentum that is just starting to increase again
• Wave 2’s pullback retraced 61.8% of Wave 1, the most common pullback % for a Wave 2
• The pullback that ended in May 2017 did not break below from where the rally began in November 2016, the beginning of the “Trump trades”
  • I take this as a bullish sign that larger institutional investors are sticking with the trade

So what should be expected if US Steel (X) is in Wave 3 of a Bullish Impulse wave pattern? At a minimum, a continued advance towards the overhead resistance trendline; that trendline resistance area is around the $35 price level. At that price level, X will either break through the trendline resistance on heavy buying volume or it may back off and see if there are any sellers at that price before it continues its advance. That is something that would need to be monitored as X’s share price approaches the $35 price level.

But before we build more expectations, lets review a more detailed chart instead of just a monthly chart. To do that, I’m going to switch over to a 3 year weekly candlestick chart.

Because if US Steel (X) is starting Wave 3 of a large Bullish Impulse wave pattern, what are the upside price targets? Let’s calculate some likely price targets both shorter-term and longer-term.

X – Upside Price Targets

This is a 3 year weekly candlestick chart for US Steel (X). I’ve placed some Fibonacci Extension Tools on the chart to calculate some upside price targets for its share price.

The green Fibonacci Extension Tool is calculating the longer-term price objectives. Focus on the Golden Ratio, or the 161.8% Target Line.

The black Fibonacci Extension Tool is calculating a shorter-term price objective. Again, focus on the Golden Ratio.

 

The Golden Ratios, or 161.8% Target Lines, represent very common ending price levels for Bullish Impulse Waves. Some strong waves reach even higher for the 261.8% Target Line, but those are not as common.

The gray shaded box represents the probable upside price target in the shorter-term. This box is just slightly above the Golden Ratio from the black Fibonacci Extension Tool and right below the overhead resistance trendline.

The most likely scenario is a short-term consolidation at that point and then a break above the resistance area. After that consolidation period, the next stopping point will be the 100% Target Line from the green Fibonacci Extension Tool. The green 100% Target Line has a price objective of $54.23.

Now, things can start to unfold more bullishly than I am anticipating, but I’ve plotted out the most probable course of action that I see on the charts.

Bearish Items to Watch For

The only bearish item you should be watching for is a break below the supporting trendline. Especially if the break occurs on selling volume that is above average trading volume. But this is not something I anticipate happening. If a break does occur, it will most likely be near or after the next earnings report. I do not anticipate this happening.

X – Point & Figure Charts

What price objectives do the Point & Figure charts calculate for US Steel (X)? Remember, there are 2 types of P&F Charts

1. Closing P&F Chart – This chart reflects a $35 bullish price objective
2. High/Low P&F Chart – This chart reflects a $38 bullish price objective

Remember to visit stockcharts.com for free Point & Figure charts for any company. That is where I go for my Point & Figure stock charts.

Both of these P&F Charts seem to indicate that X is going to, at a minimum, re-test its overhead trendline resistance area that was identified above on the monthly and weekly charts.

US Steel (X) – Summary

So is US Steel (X) still a Trump trade? The charts are saying yes. I think this may even deserve a small purchase for mom’s retirement account given its upside potential over the next 1 – 1.5 years.

When a stock is in a Wave 3 of a Bullish Impulse wave pattern, you need to be bullish and aggressive in buying shares yourself. If you are trading the uptrend along with keeping a core position, do not stay out of shares sold for more than a day or two. Otherwise, you will most likely be caught buying back shares at higher prices. Wave 3’s are strong and aggressive.

Just look at IAG right now. It is definitely in Wave 3 of a large Bullish Impulse wave pattern itself. I sold some shares of its last week and now need another day or two of pullbacks to get back in where I sold my trading shares at.

So long story short, stay long US Steel (X) over the next year. And then give Mr. Trump a big thumbs up if his Trump trade works out…

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