Nucor and US Steel may still offer investors value in the steel sector

The steel industry is one of the few areas that some are discussing as a possible bullish sector to be long, so let's take a look at the charts of Nucor (NUE) and US Steel (X). It's interesting how their chart patterns are different, and it's obvious just from the amount of drop off the highs and the OBV (on balance volume) indicator that Nucor does have more relative strength than US Steel. So Nucor may be the better vehicle for playing a rally, even if a rally in this industry could give both stocks a comparable percentage increase from where they are now.

The Nucor long-term monthly chart gives the impression that it may yet move to new all-time highs in an Elliott Wave fifth wave up. Alternatively, if you don't want to assume that and would like a more conservative target, the daily chart does show that Nucor could get to $61 or so, based on the relatively conservative idea that price already put in an A wave, corrected in a B wave, and then C up remains (so C=A at about 61). There are certainly wave counts that would take it higher than that. Note also that Nucor is moving in on its 200-day moving average. If Nucor gets above its 200-day moving average, it will be deemed "above the line" from a trading chart perspective and assumed to be uptrending on that basis alone (at least if the 200-day MA itself moves into an uptrending attitude, which does look possible to happen relatively soon. So, although I don't want to issue any guarantees, an investor might be interested in Nucor, back-stopped by my hypothetical uptrending channel line and the price level of $36.95. If it cannot hold $36.95, then it would be reasonable to sell out and re-assess (in order to protect investment capital).

So here are the Nucor charts, and then we'll look at the US Steel charts:



The US Steel (X) chart is more concerning, because of the depth of the drop and the indicators as mentioned, such as OBV, moved to a weaker position. Yet there do remain Elliott Wave counts in which it could have either a substantial rally, or - less likely but still possible - even get to new highs. Before we get all excited about which of these scenarios it might provide, let's approach it similarly to the Nucor chart - a long position back-stopped at just under $27.49, and in this case let's see if it can even do a C=A type movement up to ~$50. Let alone, whether X could get to its 200-day moving average which is currently about 93 ... but by the time X might get to $50, then its 200-day MA might be closer by: