Buy Half Positions in CLF, SLV
Cleveland-Cliffs (CLF), North America’s largest flat rolled steel and iron ore pellet maker, just reported mostly upbeat second-quarter earnings.
Revenue for the steelmaker in Q2 rose 26% from a year ago to $6.3 billion, while per-share earnings of $1.31 missed estimates by five cents.
Other highlights included free cash flow that more than doubled from the prior quarter, plus the firm’s largest quarterly debt reduction since it began its transformation two years ago.
The company, which enjoys a leadership position in providing steel for the U.S. automotive industry, expects the enormous backlog for vehicles will result in higher steel demand in the coming quarters, which could help push prices for the metal higher.
The stock, meanwhile, is subject to what looks like a growing short squeeze, as 9% of the float is currently sold short. Traders can purchase a conservative position in CLF here using a level slightly under 17 as the initial stop-loss on a closing basis. BUY A HALF
Meanwhile, silver is perking up again and is building a short-term basing pattern. Consequently, my favorite silver-tracking fund, the iShares Silver ETF (SLV), has shown some notable technical improvement in the last several days.
SLV is back above its 25-day line after spending the better part of the last four months under it. The fund is still under the more psychologically significant 50-day line, but with short interest factors in silver’s favor (per our recent discussions), the odds favor SLV eventually getting back above this key trend line.
Accordingly, investors who don’t mind the volatility risk associated with buying near a major low can purchase a conservative position in SLV. I suggest using a level slightly under 17.15 as the initial stop-loss on a closing basis. BUY A HALF