Trade of the Day: United States Steel (NYSE:X)

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My indicators are bearish this week, and it now appears that the market is moving into some kind of corrective phase, as it is heading towards the lower part of its trading range. While the S&P 500 Volatility Index (VIX) is not that high, it did spike to a peak of 17.65 on Thursday, which can be partially attributed to the EgyptAir crash. However, it’s getting to the point where we do need to pay closer attention.

Moody’s recently lowered its 2016 growth forecast for the U.S. from 2.3% down to 2%, and it also revised its forecasts for the global advanced markets from 1.9% down to 1.7%. The ratings agency cited subdued global demand and weaker business investment for its revisions, and it also expressed concerns about a potential slowdown in China, which would pose a significant risk to the global economy. If this sounds familiar, it’s because I’ve been sharing these same concerns for months now.

Another area of concern for the market can be found in copper prices, which are really down right now. Copper is a leading indicator of the markets, both U.S. and worldwide, so when prices get punished, it suggests trouble ahead. It’s probably one of the key leading indicators of what the market is going to do or what the world’s going to do economically going forward.

But there’s another way to play the downside in metals that has a more attractive risk-to-reward setup for us:

Buy to open the United States Steel (NYSE:X) Jul 12 Puts (X160715P00012000) at $1.05 or lower.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/05/trade-day-united-states-steel-x-nyse/.

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