Has United States Steel Corporation (X) Stock Found a Bottom?

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Steel stocks are beginning to percolate. Whether it’s a ruse remains to be seen, but we’re seeing enough constructive price action to interest the bottom fishers of the Street. United States Steel Corporation (NYSE:X) is a prime example. Let’s see if X stock does, in fact, mark the spot.

Has United States Steel Corporation (X) Stock Found a Bottom?

The past six months for X have been insanely volatile. It doubled amid all the post-election euphoria fueled by hopes of infrastructure spending and higher inflation expectations. And then all the optimism melted in the face of a terrible earnings announcement. It turns out the rise from $20 to $40 was built on a house of cards.

And just like that, U.S. Steel is back where it started, languishing at a lowly $20.

Over the past month, however, some strides have been made. A short series of higher pivot lows has cropped up showing a slight uptick in demand. While the price advance in X stock has been minimal, this is at least a sign that buyers are trying to establish a foothold.

U.S. Steel (X) stock chart
Click to Enlarge
Source: OptionsAnalytix

The 20-day moving average has flattened out confirming the neutralizing of U.S. Steel’s short-term trend. We’ve also seen a pair of high volume up-days. Accumulation, however slight, is sure to aid in the bottoming process.

A Pair of X Stock Option Trades

Pattern-wise, the back-and-forth of the past few weeks has taken on the form of an ascending triangle. At this point, there are two ways to play the setup.

Either wait for a breakout above resistance ($21.60) to confirm an uptrend is taking root. Or, look for a break of the trendline (dotted black line in chart) to signal a new downswing is beginning.

If we get upside resolution, consider selling the Jul $19 put. You should be able to get around 50 cents when the stock is breaking the $21.60 resistance level. The profit will be limited to the initial credit and will be captured if United States Steel sits above $19 at expiration.

If X stock instead breaks below its trendline ($20), sell the Jul $23 call for around 50 cents. Consider this a bet that the stock remains below $23 for the next month. If it does, you’ll pocket the 50 cents.

As of this writing, Tyler Craig did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2017/06/has-united-states-steel-corporation-x-stock-found-a-bottom/.

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