AK Steel (AKS) was downgraded yesterday (Tuesday) by the quantitative service run by TheStreet.com. AKS had already weakened on the charts with a peak at the end of July, but let's see how these two investment approaches look together.
In this daily chart of AKS, above, we can see a steep rally in July that ended with prices quickly giving back the markup. Prices sliced through the 50-day moving average line on the way down and the slope of the line has turned to the downside.
Prices are still above the rising 200-day moving average, but that condition may not last for long. The uptrend from the January low has been broken (trendline not shown). The On-Balance-Volume (OBV) line did mirror the advance in July, confirming the price strength, but it has also weakened this month, signaling more aggressive selling. The Moving Average Convergence Divergence (MACD) oscillator in the lower panel is in a sell mode below the zero line.
In this three-year weekly chart of AKS, above, we can see that prices are still above the rising 40-week moving average line, but there isn't much more room before a test of that line. In the middle panel is the weekly OBV line and we want to point out that the new price high in July was not matched with a new high in the OBV line.
This difference suggests that the rally was not well supported by volume. In the lower panel is the weekly MACD oscillator which has just crossed to a new liquidate longs sell signal.
Bottom line -- with weak daily and weekly indicators and a quantitative downgrade I would look for AKS to decline into the $4.00 to $3.50 area in the days ahead. This weakness, should it happen, would break support at $4.00 and the rising 200-day moving average line. If you are long AKS with a profit, I would sell and book it.