Cleveland-Cliffs (CLF) Continues To Break Out
This is an update to my prior post found here:
https://leofinance.io/hive-167922/@videosteemit/an-abbreviated-look-at-cleveland-cliffs-inc-clf
On the road to recovery ...
Cleveland-Cliffs (CLF) is America's leading iron ore producer and nascent steel producer having merged with the former AKS Steel, a leading electrical steel product manufacturer. The merger provided an opportunity for the two companies to vertically integrate and combined two of the higher quality players within their respective industries.
As expected, Cleveland-Cliffs is beginning to show some strength as it begins to break out of the deeply engraved channel it was following. Shown below, the stock has been testing some VWAP lines based off market lows and staying within its bollinger bands until recently. I suspect that the red VWAP line will prove to be the new support line if/when the stock pulls back.
The company should gain as the market begins to sniff out value. Not only is there an upcoming catalyst incoming with the completion of the company's HBI plant which is anticipated to significantly increase their cash flows upon fully-run operations, but the market itself looks to be undergoing a shift in sentiment. This is especially true in light of a bifurcation gap between growth and value companies as noted in the chart below. CLF in this instance would be a value company, unlike much of the tech-driven growth companies. As this gap begins to close a bit, CLF should benefit.
In terms of business cycles, the timing appears ripe for the company to begin an ascent as well. On the onset of a recession, materials tend to do poorly. Towards the latter half, they begin to rise before a recovery as they serve more as a leading indicator. More so, the low interest-rate environment and unprecedented stimulus is also providing an environment of inflationary pricing which is first seen in materials. Last of all, as jolting the economy eventually becomes more of a priority, infrastructure spending is surely to be part of the recovery as it is some of the lowest-handing fruit for politicians to pursue.
Posted Using LeoFinance