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Nucor Corporation (NUE): Another Shorting Opportunity?

December 30th, 2015

short selling banRick Pendergraft:  Steel manufacturer Nucor (NYSE:NUE) has trended lower for the past year, and the decline has been a pretty orderly one with a downward-sloped trend channel forming on the weekly chart. After getting a bullish signal on my daily scan, I came to the conclusion that any bounce in the stock would be short-lived.

Nucor shares

While the steel industry as a whole as performed poorly over the past year, the decline in Nucor has been far more orderly than the declines from rivals Allegheny Technologies (NYSE: ATI) and Arcelor Mittal (NYSE: MT). Allegheny shares have  dropped over 75% since June 2014 and a labor dispute with the United Steel Workers is potentially accelerating the decline. Arcelor Mittal has seen its shares fall by over 67% just since its May high.

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Nucor, on the other hand, is only down around 30% from its all-time high set in September 2014. While its decline isn’t as sharp as its competitors, the momentum toward Nucor is still to the downside.

Looking at the daily chart, we see a downward-sloped trend line that connects the closing highs from the past six months and that trend line is hovering right around $41.50 at this time with the stock closing at $39.73 yesterday. Should the stock bounce just a little in the next few days, it will face the resistance of the trend line.

NUE Daily Wyatt

Turning to the weekly chart, we see the previously mentioned trend channel that has contained the price for the last year and a half with the upper rail right at the $43 level. If the resistance from the trend line on the daily chart and the upper rail of this channel aren’t enough resistance for you, they are backed by another layer of resistance in the form of the 52-week moving average, which is currently at $44.08.

NUE Weekly Wyatt

While Nucor has been falling for some time now, the sentiment is fairly neutral with a short interest ratio of 3.13. Eleven out of 19 analysts rate the stock as a “buy.”

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