Jocelynn Drake from Forbes reports “The Market Vectors Steel (amex: SLX) exchange-traded fund, for example, has enjoyed a gain of more than 40% since the start of 2009. However, the steel ETF has recently broken below key short-term support at its 10-day and 20-day moving averages, and is now testing round-number support in the 40 region. The ETF’s 10-week trend line resides in the 40 region and could help to buoy the sector during the near term. In fact, the SLX has not finished a week below this moving average since the end of March.”
“Despite the overall strength in the SLX, sentiment toward the steel sector is relatively mixed. Options players have grown optimistic about the group’s prospects. The composite Schaeffer’s put/call open interest ratio rests at 0.7 and is lower than 97.2% of all the readings taken during the past year. In other words, options players have been more bullishly aligned toward the group less than 3% of the time,” Drake Reports.
“Meanwhile, Wall Street has taken a decidedly bearish stance toward the steel companies. According to the latest data from Zacks, less than 38% of the analyst rankings on the steel companies come in at a “buy.” This pessimistic stance toward the sector leaves ample room for potential upgrades, which could add some lift to the steel group,” Drake Reports.
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