Steel Dynamics (STLD) reports its quarterly earnings this evening and shares look to be pointed higher based on its improved technical position.
STLD corrected lower after a small top in the $21 to $23 area in May and June. Prices worked lower, as can be seen in the chart above, bouncing from the $17 level, which held in January and March of this year. There are some short-term technical positives on this chart as prices have rallied above the 50-day simple moving average. The On-Balance-Volume (OBV) line is rising. There is a bullish divergence between the lower prices made in August and September and the higher momentum readings, which tends to foreshadow a bounce or a rally. Prices haven't yet broken the pattern of lower lows and lower highs established over the past four to five months, but that could happen soon.
In this longer-term view of STLD, above, we can see that prices have bounced off the $17 to $16 level a number of times the past two years. The OBV line does not indicate significant distribution but rather some slight accumulation.
A short-term pullback to the $18 to $17 area and then a rally to a new high for the move up would establish an uptrend on STLD. A retest of the $22 to $24 area in the next few months is our price target.