This strong market is causing my individual stocks to become extended, so I'm spending more time looking for bounce-type plays. Typically, I look for relative strength and potential breakouts, but the opportunity to catch something coming off a support level can be appealing.
Once such name, which I added this morning, is US Steel ( (X) ). X had a great run in July, and then reversed hard over the last two weeks. Part of the reason it pulled back was a secondary offering, priced at $23 on Aug. 9. The stock busted pricing two days later, and that caused a washout.
This morning, J.P. Morgan named X its top pick in the metals and mining sector -- and maintained its price target of $37. There is a substantial short interest of 31% of the float, which should provide some fuel, if the bounce gains further traction.
The first area of resistance is the secondary pricing at $23, and then the gap back in July over that level. I'm keeping a very tight stop on my initial buy -- at around $20.75.