Like many other steel companies, Steel Dynamics (STLD) exploded to the upside today in the wake of the U.S. presidential election outcome. I glanced at the charts of a number of steel companies this morning and I culled out STLD as one steel name that I thought had plenty more upside.
In this 12-month daily chart of STLD, below, we can see that prices traded sideways in a six-month consolidation or congestion zone from May until October.
The On-Balance-Volume (OBV) line stayed "firm" in this period suggesting that aggressive buyers from January until June stayed with their new positions. Notice how the OBV line starts to move higher in mid-October, just ahead of the price strength. STLD is above the rising 50-day average line and has been above the rising 200-day line since March.
Before STLD broke out to a new high over $28, the Moving Average Convergence Divergence (MACD) oscillator moved above the zero line for an outright buy signal.
This longer-term weekly chart of STLD, above, is also bullish. STLD is above the rising 40-week moving average line. The weekly OBV line is supportive and the weekly MACD oscillator just flashed a new go long buy signal. So the charts and indicators are bullish, where are we headed? Call in the Point and Figure chart, below.
This longer-term Point and Figure chart of STLD, above, gives us a potential upside price target of $46. (Price targets on Point and Figure charts are derived by counting the columns of Xs and Os across and then projecting them upward.)