Time to Take Some Profit in Nucor
While gold and other precious metals are struggling, steel and steel-related stocks are soaring as the U.S. Senate just passed a $1 trillion infrastructure bill.
The package includes a $110 billion earmark for roads, bridges and other infrastructure that would benefit the steel industry. Also included in the deal are $66 billion for trains and $73 billion for alternative energy, which also would presumably benefit steel makers.
Consequently, steel stocks are on the move with leaders like U.S. Steel (X) and Steel Dynamics (STLD) up between 5% and 6% on Tuesday. But the true outperformer was Nucor (NUE), our sole position in the steel sector right now. Shares of the steel and steel products manufacturer were up nearly 10% on Tuesday, and our position now shows a gain of 13% in just a week.
Part of the reason for Nucor’s rally was residual sector strength, but also contributing was its successful completion of its acquisition of Cornerstone Building Brands’ insulated metal panels (IMP) business. The addition is expected to provide Nucor’s customers with a full range of products to service high-end architectural applications, as well as the quickly expanding cold storage and warehousing markets.
Per the rules of our technical trading discipline, now that NUE has gained more than 10% it’s time to take some profit off the table. Accordingly, I now suggest taking partial profits and raising the stop-loss on the remainder of the trading position to slightly under 104 (our initial entry point) on an intraday basis.