During Wednesday's Lightning Round segment of Mad Money, one caller asked Jim Cramer about Cleveland-Cliffs (CLF) : "The Chinese are spending on iron ore and this is a winner in my book," responded Cramer.
Let's check out the charts of the largest flat-rolled steel company and the largest iron ore pellet producer in North America. We looked at CLF at the beginning of April and wrote that "It would have been nice to have recommended going long CLF last week before the breakout, but it was not on our radar screen. Traders could try to buy a dip into the $19-$18 area and risk below $15. The $31 area is our price objective from the Point and Figure chart."
Let's check out some up to date charts of CLF.
In this daily bar chart of CLF, below, we can see that traders have been able to buy a dip into the $19-$18 area and our stop suggestion below $15 has not been reached. CLF has tested the rising 50-day moving average line and is well above the rising 200-day moving average line.
The On-Balance-Volume (OBV) line has been moving sideways since early January but now shows a slight decline in April as prices have pulled back. The Moving Average Convergence Divergence (MACD) oscillator is above the zero line and looks like it is poised to cross to the upside for a new buy signal.
In this weekly Japanese candlestick chart of CLF, below, we can see an improving technical picture. The latest candle bar shows a large lower shadow telling us that traders are rejecting the lows. The slope of the 40-week moving average line is positive and the weekly OBV line looks more constructive than the daily line. The MACD oscillator is above the zero line but the two moving averages are on top of each other. The indicator could turn up or down from here.
In this daily Point and Figure chart of CLF, below, we can see a potential downside price target in the $14-$13 area. A rally to $19.24 should restart the uptrend.
In this weekly Point and Figure chart of CLF, below, we can see a possible upside price target in the $33 area.
Bottom line strategy: Continue to hold longs acquired in the $19-$18 area. Continue with the stop protection below $15 for now. Add to longs above $19 and look for gains to the $33 area in the weeks ahead.