In his first Executive Decision segment of Monday's "Mad Money" program, host Jim Cramer spoke with Leon Topalian, CEO of Nucor (NUE) , a steelmaker with shares that trade for less than five times earnings.
In discussing Nucor's recent acquisition of CHI Overhead Doors, Topalian said Nucor's strategy is to grow its core steelmaking business and expand into new areas where it can add value. He said overhead doors give Nucor a footing into the warehouse steel market, which has been red-hot as e-commerce expands.
Let's check out the charts and technical indicators of Nucor.
In this daily bar chart of NUE, below, we can see that prices dipped into late January of this year and then proceeded to quickly double with a fresh high in late April. Another selloff has occurred, bringing prices back down to break below the 50-day moving average line and test the firming 200-day moving average line Monday. The trading volume has been active but choppy while the On-Balance-Volume (OBV) followed prices higher into late April and then moved to the downside. A turn higher now for the OBV line will be a constructive sign for NUE. The Moving Average Convergence Divergence (MACD) oscillator is in a bearish alignment below the zero line.
In this weekly Japanese candlestick chart of NUE, below, we can see that the most recent candlestick pattern has a small red real body as prices test the rising 40-week moving average line. The small real body tells us that buyers and sellers of NUE are getting in balance and a white real body this week could mark a bottom reversal. The weekly OBV line shows a three-year rise and only a few weeks of weakness. The MACD oscillator crossed to the downside for a take profit sell signal.
In this daily Point and Figure chart of NUE, below, we can see the recent decline and a downside price target of $129 that was reached. It may take a rally to or trade at $126 or higher to steady this chart.
In this weekly Point and Figure chart of NUE, below, we can see a bearish downside target of $49. Demand destruction?
Bottom line strategy: The broad market averages are ready for a recovery bounce or rally for a few weeks. Aggressive traders could go long NUE for a rebound. Buy at current levels risking to $111. Take profits at $150-$155 if available.
