United States Steel (X-N)

$25 is support and could bounce off this. Sell the July $34 call, collect $1.45 and use that premium to fund your July put.

He has no idea to assess Trump and his macro plans. It's a political nightmare. Sell. A tariff would lift US steel stocks, but demand for US products will also drop. Be prudent and let this stock go.

CEO optimism has been rising in the U.S. The steel sector and this stock are doing well. In fact, this is one of the leading sectors in America. Certainly take a look at this.

This is very whippy, and he wouldn’t want you to be overly focused and concentrated in such an idiosyncratic name. Steel names are not his favourite. The chart indicates it has been very challenged. Fundamentally, they have had some earnings misses and are more often missing then they are hitting. There are much greener pastures elsewhere.

Following the gap a number of weeks ago, this continued to decline, which is not what you want to see. The chart has shown a head and shoulders pattern. This is the type of thing that he tries to avoid.

Trump has said they will be using US steel for future pipeline projects. Don’t use political comments as your only criteria. You may have missed the pop on this. ROC is actually negative now. Even putting in improvement to a normalized level, or even an above average level, he doesn’t think the price of the stock can be justified.

There is very limited upside to US Steel selling prices before imports can come in. In order to call for higher levels, one has to assume that there will be draconian trade barriers put in place, which is possible. There are other steel stocks to choose from. The only argument that would make this company the preferable trade, is if the oil country tubular goods market does much better than other end uses. This company, unlike other producers, has a significant exposure to oil country tubular goods. He thinks the market is pricing in some combination of protectionist measures, and possibly some incentives for domestic oil production. As a value investor, a lot of things have to go right before he invests in this.

The US steel market has been glutted for years. Then the US government enacted anti-dumping legislation for the US. When you look at steel, it is an infrastructure investment in a protected environment. This is a strong company and there is plenty of upside in steel.

This has had a really great recovery off the bottom, but the steel cycle is very challenged. Every significant country wants the steel industry. It is part of independence. There is too much steel capacity out there, and you are really at the mercy of imports.

(Market Call Minute.) Steels have had a good run recently. If you believe the economy is getting better, you can participate in this group. Higher BETA, higher risk. Keep a tight Stop.