Shares of United States Steel (X) have lost steam over the past month after the stock’s latest rally peaked at a four-year high of $39.24 on April 1. The stock has since slipped below its 20-day moving average, although it still maintains a 22% year-to-date lead. Now may be the perfect opportunity to buy falling stocks, as X has just retraced to a historically bullish trend line which could help it to make a comeback in the coming weeks.
The trendline in question is the 80-day moving average for United States Steel stock. According to research by Schaeffer senior quantitative analyst Rocky White, the stock has approached this trendline three times in the past three years, posting positive one-month returns following those signals 67% of the time. , with an average of 12.7% popular. From its current perch of $29.24, a similar move would place X just below the $33 mark.
With four of the six analysts on the cover calling X lukewarm “holding” or worse, it looks like the stock could benefit from a series of upgrades. Additionally, short sellers are already hitting the exits, given that short interest is down 14.3% over the past two reporting periods. Still, the 27.60 million shares short represent 10.7% of the stock’s free float, indicating that the stock could still see the tailwinds of a new unraveling of this pessimism.
United States Steel stock could also be boosted by a change in sentiment in the options bottom. In fact, X’s Schaeffer open put/call interest ratio (SOIR) of 1.46 is above 94% of the past year’s readings. In other words, short-term options traders have rarely been more biased