Helping Self-Directed Investors Succeed Blog - Will The Dynamics of Steel Tariff Impact This Stock

Will The Dynamics of Steel Tariff Impact This Stock as of July 6th, 2018

July 6th, 2018

US Equities are continuing to show some bullishness despite the enormous Trade War uncertainty that's keeping investors on the edge. On Friday, President Trump announced tariff on $34B of products imported from China. China was set to counter that with their own tariffs on a variety of US products. In this dynamic, hot and uncertain environment, US equities climbed a huge wall and closed higher on Friday. The S&P 500 ETF - SPY is up 3.2% for the year. The Dow 30 ETF - DIA is as of this week still below the line at about -1.12%. The Nasdaq 100 ETF - QQQ is way ahead of the pack and is up 12.74%.

This week our focus fell on this Metals/Mining stock - Steel Dynamics, Inc. - STLD which gained slightly in price from the prior week. The stock logged a 52-week high on May 17th at $52.10 and has since been correcting. On Friday it closed at $46.39. The May 17th breakout could not succeed and we believe this is mainly due to the dynamics of the tariff situation that's keeping investors cautious.

STLD manufactures a variety of steel products. The company is scheduled to release Q2 earnings on 7/25 which is just a few weeks away. The stock is trading above its 40-week SMA and as of now technical signs of finding support around this average are not conclusive. Earnings Q-0-Q and Y-o-Y are expected to be solid which is a positive going for this stock.

If the broader market reacts positively to the tariff situation in the coming week - with the impetus provided by Friday's positive action - the stock may find support at its 40-week SMA and if the tariff situation resolves favorably to the US - a big if - this stock has the potential for further upside.

Self-directed investors will want to perform more research on this stock to see how appropriate this is for their own portfolios.

Good Luck and Happy Investing!

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