For his second "Executive Decision" segment of Mad Money Thursday evening, Jim Cramer spoke with Leon Topalain, president and CEO of steelmaker Nucor (NUE) .
Topalain said Nucor makes products for everything from automotive and agriculture to construction and infrastructure. Every one of their end markets is growing and showing improvement as the pandemic winds down.
When asked about their automotive business, Topalain noted that as the semiconductor shortage improves, auto supplies will ramp up, but that doesn't mean the industry will be fixed overnight. He said it will take years for the pent up demand to be fully met.
Topalain said renewable energy, primarily with on- and off-shore wind farms, is a particular fast-growing sector that Nucor is well positioned to capitalize on.
Let's check out the charts of NUE, which is a holding in TheStreet's Action Alerts PLUS portfolio.
In our Dec. 14 review of NUE we were bullish and recommended that traders should, "Continue to hold NUE longs from previous recommendations. Raise stops to $105 from $101. Strength above $122.47 is bullish. The $141 area is our new price target for now." The price strength lasted into early January.
In the updated daily bar chart of NUE, below, we can see that the stock quickly declined in early 2022 and broke below the rising 200-day moving average line. Prices have been weak enough to turn the slope of the 50-day average line negative.
The On-Balance-Volume (OBV) line only shows a slight decline this month while the Moving Average Convergence Divergence (MACD) oscillator is below the zero line in sell territory.
In the weekly Japanese candlestick chart of NUE, below, we can see how prices quickly reversed direction this month with a large upper shadow telling us that traders rejected the highs and a large red (bearish) candle that sliced through the 40-week moving average line.
The weekly OBV line has been strong since September so I wonder if we have a lot of new longs at a high price level. The MACD oscillator has been pointed down toward the zero line for months.
In this daily Point and Figure chart of NUE, below, we can see the quick reversal from strength to weakness. This chart now shows a downside price target of $88. Not long ago the chart was bullish.
In this weekly Point and Figure chart of NUE, below, the software is now projecting the $52 area as a potential price target.
Bottom-line strategy: It is never fun to get bruised in trading with one day recommending buying a stock looking for an upside breakout only to quickly see prices plunge and turn from a gain to a loss. Prices might retest the underside of the 200-day moving average line but I would take a defensive stance going forward.