It's a good time to be a low-cost steelmaker, Topalian said. Many of the older steel plants that produce at higher prices never came back online after the pandemic began, which has led to strong demand in all of Nucor's end markets.
"Our customers are doing well," Topalian said, and that's led to strong demand for steel.
Nucor has invested over $4 billion in recent years and that investment is now paying off.
The last time we looked at NUE was back on October 23 and recommended that "We would continue to recommend buying a pullback to $46, risking below $43 with an upside of $56 plus as the best trade idea for NUE for now." Prices made that dip in late October and passed our price target in December.
Let's check out the charts again.
In this updated daily bar chart of NUE, below, we can see that prices made another dip in late January/early February to a higher low before rallying to new highs. This dip approached the rising 200-day moving average line and with hindsight could be considered a buying opportunity. NUE has rallied back above the rising 50-day moving average line.
The On-Balance-Volume (OBV) line moved lower from October to late January before soaring sharply to new heights. The now rising OBV line tells us that buyers of NUE have been more aggressive.
The trend-following Moving Average Convergence Divergence (MACD) oscillator turned back above the zero line in mid-February for a fresh outright buy signal but the indicator has recently narrowed.
In this first weekly bar chart of NUE, below, we can see the past five years of price history. Prices are challenging the peak set back in early 2018. NUE is trading above the rising 40-week moving average line.
The weekly OBV line is rising and confirms the price gains. The weekly MACD oscillator is in a bullish alignment above the zero line.
In this second weekly bar chart of NUE, below, we used all the price data available on www.bigcharts.com. This chart shows the data back to 1985. I want to point out the large consolidation pattern from 1994 to 2003 in the $15-$10 area. Notice the huge rally that began in 2004? NUE has made another large consolidation pattern from 2008 to now. A strong weekly close above the highs of 2008 in the $80-$85 area will be a major, long-term breakout.
In this daily Point and Figure chart of NUE, below, we can see a potential downside price target in the $64 area.
In this weekly close only Point and Figure chart of NUE, below, we see that the software is projecting the $114 area as a potential long-term price target.
Bottom line strategy: If you are still long NUE from our October recommendation - great. If you took profits on the trade that is fine too. Traders could look to rebuy NUE on a decline to the $64-$60 area or add to longs if that is the case. Risk to $55. Longer-term our next price targets are the round number of $100 and then the $114 area.