Hot Pick Of The Day

[Tatnic]

Peanuts has an interesting perspective on steel. He's bullish because he sees consolidation in the industry as the big boys gobble up the smaller boys.... much like banks and telecom experienced in the 90's. He's also in the "business" as he sells his CO's products directly to the mills.

Now I'm also "in the business" as a OEM buyer of flat rolled product and a vendor of custom fabricated components to a major steel mill locally. In other words I talk to and listen a lot the these steel mill operatives on both sides at STLD.... The shirt and tie engineering, purchasing and sales folks.... and the dirty wearhouse managers and maintanance guys.

Here's what I know.... STLD has cut overtime and inventory is building. GNA's inventory is building as well and all three sizes I buy from them are currently IN STOCK! this I have not seen in three years! We received a 2%+ price decrease on Friday from GNA.... My inside contact at STLD told me Thursday the they got a Corp. letter (that morning) stating a price cut in structural and flat rolled product of a little over 2% and the scrap surcharge had fallen overnight by 20.5%, that's HUGE! Scrap prices are falling and this is always an early sign that there is a (pipeline) glut in inventory because the producers don't need the scrap anymore.

I see the TA on steel and I agree it looks nice, but I see deeper than that. I've traded these steel stocks since the 80's and I know what signs to look for. The prices I pay are up about 19% year over year and the steel index of these Co's stocks I watch is up over 60% in the same time period. Historically, I've seen steel prices fall 10% overnight and steel stocks fall 30% before you can blink an eye. Steel ain't some sexy high tech product, it's just a freakin' commodity.... demand falls, supply rises, inventories rise, prices fall.... STEEL STOCKS CRASH!

PS.... there's a discussion on steel from last week on my thread.

Lye...you IMO are probably one the smartest ones (smarts have absolutely nothing to do with education...most overeducated people are brainwashed and can't see the forest for the trees) on this board. That was one of the best analysis of the steel industry I've read in a while and I am going to spend some time looking into steel stocks that are short candidates. I'm not ready to jump in with both feet on the short side but you got me thinking. Thanks for that.

[New-born baby]

GROW
inverted head and shoulders?

On the daily GROW has sort of an inverted head and shoulders pattern. It is not a pure pattern, but I'd still use it to measure possible price targets, in this case around $33.50. Perhaps GROW will make a double top at $35. This stock was quite impulsive today. Note that, here on the daily, GROW could also form a head and shoulders pattern.

[New-born baby]

CPST is about 70% below it's MA 200.... Now it's sitting right on it's MA 50.... Are you sure you punched up the correct ticker?

CPST: DOH! No I am NOT sure I punched up the right ticker! Double DOH! Thanks for calling it to my attention Anyway, CPST has strong resistance at $2.04, and decent support right here at $1.69. I think it might move up 10% from here, and when dealing with a penny stock, that's a good place to take profits.

Hey, Lye, why don't you make a comment about the chart you asked us about? Bullish or bearish, etc.

Here's the CPST chart

[Lyehopper]

Lye...you IMO are probably one the smartest ones (smarts have absolutely nothing to do with education...most overeducated people are brainwashed and can't see the forest for the trees) on this board. That was one of the best analysis of the steel industry I've read in a while and I am going to spend some time looking into steel stocks that are short candidates. I'm not ready to jump in with both feet on the short side but you got me thinking. Thanks for that.

Thanks Tatnic.... I think I might be a bit early. It's a little weird but I found out today that steel "plate" is not seeing a decrease yet nor is one planned. Not sure exactly what that means just yet or why. I'm watching this daily and I'll post what I see when I see it....

Is anyone looking at regional banks? I think there is a great play there (long). I'm watching the group. Here are some I like VCBI, CORS, SBNY....

NBB, I'll post on that chart later if I can remember. I sold calves today and I've been running wide open since before daybreak and I got very little sleep last night so I'm about to drop.LOL!.... As a side note, Live cattle prices are off about 15% from about four weeks ago and it's killin' me here. If I had my little feedlot finished I'd have been buying today instead of selling. I don't know too much about futures but I guarantee that live cattle prices next spring (May-ish 2007) will be 25% above where they are today....

[IIC]

I truly believe that China will try to flood the market with steel...But will the tarriff barons stop them??...too tough for me to call...I will just sit back and watch for now...Doug

[spikefader]

...Is anyone looking at regional banks? I think there is a great play there (long). I'm watching the group. Here are some I like VCBI, CORS, SBNY...

Not liking the TA so much for those 3 yet, Lye, but how about these to stalk long: CHCO SBCF PBKS BBT PFS

[billyjoe]

In the 1970's American cars were notorious for rusting away before their time. Everyone said it was bad steel and let it go at that. Does anyone here know the real story behind the "bad steel" of the '70's ?

---------------billyjoe

[peanuts]

I truly believe that China will try to flood the market with steel...But will the tarriff barons stop them??...too tough for me to call...I will just sit back and watch for now...Doug

You need to do some more research. Steel is safe from China for a couple of years longer. You have to consider 2 things: 1) The internal demand for steel in China. 2) the difference between the tons of steel used per person in China and America, and rate of change YOY for this figure.

I'll give you some answers:
highest demand ever in China for all building materials
US uses 6 times the amount of steel per person than China, but the difference is shrinking rapidly as Chinese get items that US citizens take for granted: toasters, ovens, microwaves, freezers, washing machines, dryers, cars, and anything else made of steel.

You guys are not seeing the big picture in steel. I have been educated in it. Don't you get that? Steel industry in the US will be stronger than everyone has anticipated. There is high demand, good labor, relatively inexpensive raw material, and little foreign competition due to an even bigger global demand.

Don't believe everything you read or hear from the "experts" They're out to make money, too.

[peanuts]

In the 1970's American cars were notorious for rusting away before their time. Everyone said it was bad steel and let it go at that. Does anyone here know the real story behind the "bad steel" of the '70's ?

---------------billyjoe

It has to do with the processing of the steel. That type (I don't know the grade) became more easily oxidized because there was more free Fe hanging around for the O2 to react with.

Today's steelmaking would process the steel more before it is even cast in order to reduce the rusting of the finished product

[spikefader]

You need to do some more research. Steel is safe from China for a couple of years longer. You have to consider 2 things: 1) The internal demand for steel in China. 2) the difference between the tons of steel used per person in China and America, and rate of change YOY for this figure.

I'll give you some answers:
highest demand ever in China for all building materials
US uses 6 times the amount of steel per person than China, but the difference is shrinking rapidly as Chinese get items that US citizens take for granted: toasters, ovens, microwaves, freezers, washing machines, dryers, cars, and anything else made of steel.

You guys are not seeing the big picture in steel. I have been educated in it. Don't you get that? Steel industry in the US will be stronger than everyone has anticipated. There is high demand, good labor, relatively inexpensive raw material, and little foreign competition due to an even bigger global demand.

Don't believe everything you read or hear from the "experts" They're out to make money, too.

Peanuts, may I trouble you for some of your favorite steel FA info links when ya get a chance? Also, which stocks do you perceive as leading bullish? Thanks.

[peanuts]

Peanuts, may I trouble you for some of your favorite steel FA info links when ya get a chance? Also, which stocks do you perceive as leading bullish? Thanks.

Spike,

I will compile what electronic information that I have, but much of my research is hard copy stuff... periodicals that I get in the office- research papers, marketing reports, etc. Is there anything specifically that you are looking for?

I'll post it on my thread, if you don't mind

[peanuts]

markets today

WOW!

I'm down 3% overall, just this morning. The run-up recently has been nice, so it doesn't seem like it's too bad, but I am going to be dropping a lot of my stocks throughout the day, and keep cash ready for the next big move in either direction.

[Lyehopper]

In the 1970's American cars were notorious for rusting away before their time. Everyone said it was bad steel and let it go at that. Does anyone here know the real story behind the "bad steel" of the '70's ?

---------------billyjoe

Mild sheet steel is just mild sheet steel Billy. Maybe the older car bodies of the 50's and 60's were made from a thicker gage and it's obvious that the construction was quite different but I'll bet the alloy of the steel was pretty much the same. Now it might be the cars made in the 70's just had "bad coatings" on them. Mid 70's Chevy pickups were notorius for rusting out very early.

[Lyehopper]

It has to do with the processing of the steel. That type (I don't know the grade) became more easily oxidized because there was more free Fe hanging around for the O2 to react with.

Today's steelmaking would process the steel more before it is even cast in order to reduce the rusting of the finished product

"Today's" steelmaking?.... You make it sound like he asked about the steel made in the 1870's....

[Lyehopper]

You guys are not seeing the big picture in steel. I have been educated in it. Don't you get that? Steel industry in the US will be stronger than everyone has anticipated.

Peanuts, Excuse me for being such an uneducated redneck but how does one become "educated" in "big picture" steel commodity evaluation? Is there a particular steel correspondence course I can order to further my education? I wonder how many toasters you can make with the steel consumed in one small commercial steel building that is not built due to interest rates or other economic conditions? Maybe that kind of thing is discussed in the course?