AK Steel (AKS) , a part of Real Money's Stressed Out index was pushed down to $1.64 back in January -- cheaper than a newspaper! This throw-away price did not last for long as prices turned back up in February, quickly reaching $5.25 before a shake-out to $3.50. Prices have a new "handle" of $6 today. What can we expect next after more than a tripling from the lows?
In this daily chart of AKS, above, we can see that prices are above the rising 50-day simple moving average line. The 200-day average line is also pointed higher. A bullish golden cross of the 50-day and 200-day averages came at the end of March, not all that far off the lows.
The daily On-Balance-Volume (OBV) line has had some big up and down swings, but in general it has confirmed the price strength. There is a June/July bearish divergence between prices making higher highs and the momentum making a lower high but it may not be a big drag on prices.
In this three-year weekly chart of AKS, above, we can use our imagination to draw a horizontal "neckline" across $6 the past 18 months. Taking the distance from the neckline at $6 to the bottom of the pattern at $1.64 and then adding it to the breakout today gives us
an upside target around $10 and change.
This move make take a while, though. Prices are above the rising 40-week moving average line. The Moving Average Convergence Divergence (MACD) oscillator is bullish but the weekly OBV line is more neutral than anything else.