Today's upgrade of steel producer POSCO (PKX) to "hold" by TheStreet's Quant Ratings comes at an opportune time. Shares of POSCO have been basing on the charts for the past eight months.
For several months, POSCO found buyers every time it dipped to around the $25 level. In January, POSCO spent some time below $25, but quickly firmed back up by month's end. A number of other technical indicators have joined in to strengthen the picture.
The On-Balance-Volume (OBV) line turned up in January as more volume began to be traded on days when POSCO closed higher. A rising OBV line is a sign of more aggressive buying.
In January, the Moving Average Convergence Divergence (MACD) oscillator generated a buy signal as it crossed above the zero line. POSCO is above both the 50-day and 200-day moving averages and the slope of the 50-day is pointed up. A golden cross could happen soon as the 50-day is poised to cross above the 200-day.
The longer-term chart of POSCO, above, has improved. Prices have rallied over the 40-week average, the OBV line shows more aggressive buying and the MACD oscillator is rising.
All things considered, POSCO could rally into the $50 to $55 area in the near term. A breakdown under $40 would upset the picture.