Shares of steelmaker Cleveland-Cliffs (CLF) were raised to an "overweight" (buy) recommendation by an influential sell-side firm Thursday. Let's check and see what is going on with the charts and indicators.
In the daily bar chart of CLF, below, I see a low was made in early November but the base pattern was being formed as early as June/July. June/July looks like a "left shoulder" and November a "head." The "right shoulder" was made in December but I cannot rule out a "complex right shoulder" in the weeks ahead.
Trading volume does not (yet) fit the classic picture which would show us increasing volume from the "head." However, the On-Balance-Volume (OBV) line shows improvement from early November and that is encouraging. The Moving Average Convergence Divergence (MACD) oscillator turned bullish in November.
In the weekly Japanese candlestick chart of CLF, below, I see a promising, but still-developing chart picture. Prices are above the 40-week moving average line but its slope is still negative. The candles show a bottom reversal pattern in late October but candles do not give us price targets. Weekly trading volume has been declining since March and that is not what older chart watchers like myself like to see.
The weekly OBV line has moved sideways since July. A rising pattern would be preferred. The MACD oscillator has crossed to the upside for a cover shorts buy signal but it remains below the zero line and an outright buy signal.
In this daily Point and Figure chart of CLF, below, I can see an upside price target of $22.
In this weekly Point and Figure chart of CLF, below, I see a price target in the $25 area.
Bottom-line strategy: The charts and indicators of CLF show improvement but further sideways price action is likely. Maybe we'll see a correction or pullback to the $16 area with a bigger base being built.
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