Chinks in the Armor: STLD

STLD and other steel stocks have been momentum favorites of mine for quite some time. While many steel stocks still look solid (l MT and RIO to name a few), some noteworthy high flyers are showing chinks in the armor. This is not a good sign for the industry as a whole.

Let's take a look at STLD's chart. The first thing that jumps out at me is that RSI is making lower highs. It is noteworthy that while price was making a double top that reached the old high in May, RSI trended lower.

Some may look at the recent positive price action and conclude that STLD is on it's way back to it's old highs. While the fact that the stock jumped back over the 50 day moving average and breakdown point earlier this month may seem like a bullish signal, it did so on less volume than the downtrend. Volume is the engine that pushes a stock forward, and I don't see much of it here. Therefore, the stock is front and center on my watchlist.

Note that this analysis is not a prediction that the stock will not mount it's old highs. However, it's fair to say that the probabilities favor a down move. While I won't take a stake in either direction just yet (that would be gambling, IMO), I will watch for a breakdown of support.

The key level to watch is $44. This area has acted as support since April, breaking down only once and subsequently remounting that level. If we see a high volume breakdown below $44, I will likely go short.

Trades and Vanity Performance Stats

I sold 1000 shares of QID at an average price of $53.86 (entry at $55.50) for a $1640 loss (-2.9%).

I covered 200 shares of AAPL at $92.05 (short at $90.10) for a $395 loss (-2.1%).

I covered 500 shares of STLD at $41.08 (short at $39.08) for a $1000 loss (-5.1%).

I sold 200 shares of VLO at $61.87 (entry at $60.24) for a $326 gain (+2.7%).

I bought 500 shares of CELG at $53.24.

I bought 1000 shares of VDSI at $17.67.

I bought 1000 shares of SMSI at $15.96.

I hope to detail the three current trades tomorrow with charts.

When I got home I was feeling depressed about the today's losses. One of my trading buddies helped put things in perspective by telling me to take a look at all of the trades I had made leading up to today. So I did :) I've compiled some vanity stats to help pick me up.

Since the February 27 sell off, I have made 24 trades (excluding the three trades I made today that I am still holding). Here is how I did:

• Win Rate: 71% (17/24)
• Total Gains: $13,962
• Average Gain: $821
• 
  
• Loss Rate: 29% (7/24)
• Total Losses: $4,029
• Average Loss: $575
• 
  
• Total Gross Profits: $9,933
• Profit After Commissions: $9,597

In 23 days, I made $9,597 as a part-time trader. Meanwhile, I made $5600 as a full-time worker. Trading Rocks!

Okay, I feel better now. Feel free to curse and throw tomatoes at the screen in disgust over my vane behavior.

To review all of my trades, go to the "Trade" label below.

Trade Updates: QID, VLO, HAL, LEH, STLD, AAPL

I was stopped out of my 350 share position of HAL at $30.44 for a $388 loss (-3.7%).

I sold 350 shares LEH at $72.71 for a $231 gain (.9%). The total gain for the 700 share position was $696 (+1.4%). I was hoping for a bigger gain, and decided to bail on the trade because I think the bounce might be over.

I bought 500 shares of QID at $54.46. I've been waiting for QID to near support. Let's see if it holds.

Along with the QID position above, I am also long 200 shares of VLO, 500 more shares of QID, short 200 shares AAPL and short 500 shares STLD.

Chart: STLD

Steel has been one of my favorite sectors over the past few months, with STLD being the trade of choice. Notice that the 50 day MA and the gap level converge at the same point. It will be interesting to see if the stock can hold above this level ($35.75-36). If the bulls can't hold the line, I can see the stock dropping down to $33.

Trade updates: QID, STLD, GS, VLO, EWZ

Man, I'm kicking myself for getting rid of QID yesterday! Stupid, stupid, stupid! I hate myself right now. I should have let the trade play out until it hit my target or stop. Micro-managing at its worst.

I'm holding on to most of my positions right now, and actually made a few buys. I bought 50 more GS at $208.16 and 300 STLD at $37.55. I also bought 300 shares of VLO at $58.04 and 200 shares of EWZ at $46.55. For now I am holding on to RL.

Note that I am using smaller position sizes. The prudent move right now is to wait this thing out, so if you're going to buy, be very careful. I'm not giving myself much rope on these trades and will clear out my positions if they fall much further.

It will take some time to see whether this is just a hiccup or a new trend. If we get a weak bounce or more weakness in the coming days, it will be a sign to get ready to short.

Today's Trades: CENX, STLD, RL and LEH

I've had a busy day at work, so I'll have to detail the trades in more depth tonight. I bought 500 shares of STLD at $40.02, 500 shares of CENX $47.64 and 300 shares of RL at $87.10.

I also got stopped out of my 250 shares of LEH at $81.61 (entry at $82.64) for a loss of $257 (-1.3%) . This may sound crazy, but I'm actually happy about this trade. I originally had my stop placed under the 50 day MA at $80.40, but decided a better spot would be at the "fill the gap" point under $82. My thinking was, if the stock can't hold the gap support level, it will likely tumble. A tenant I try to adhere to when placing stops is that price action support is more important than moving average support.

An emailer asked my why I am placing so many long trades when I am short the Nasdaq. Take a look at my trades closely. I am not making any bets on tech. My longs have come from the commodity, broker (bad move) and retail sectors.

Today's Trades: STLD and AKAM

I sold all 900 shares of STLD at an average price of $39.88 for a $1577 gain (entries at $37.87 and $38.45). Currently we've got a long bar heading right into resistance at $40. This is a strong stock, and steel has been on fire, so I may re-enter on a break of $40 or pullback to the bottom of the price bar.

I bought 400 shares of AKAM at $55.63. This is more of a speculative play as it does not fit any of the technical entries I normally use. Every once in a while I allow myself a trade like this one, as long as I stick to my stops. The stock has generally fought off the bears and continued higher after pullbacks. It's sitting right at the 20 day MA. My stop will be placed under the 50 day moving average, probably at $53.90.

Today's Trades: NCTY, CHIC and STLD

I was stopped out of the remaining 250 shares of NCTY at $36.15 for no gain. The total gain on the 500 share trade was $275.

I bought 500 more shares of STLD at $37.87. I am currently in for 1000 shares of the stock, with the other 500 shares entered in at $38.45. I like the orderly pullback, and have a stop placed around $36.

I went short 400 shares of CHIC at $30.30. This stock caught my eye as a potential short when it broke down late January. I like the "bearish flag" pattern and failure to mount the 50 day MA.

I will most likely place a stop just above the 50 day MA, at about $31.15.