Cleveland-Cliffs’ Charts Look Uninspired Ahead of Earnings

The technical signals indicate there are better options than the stock of the integrated steelmaker.


Jul 21, 2022 | 08:16 AM EDT

Stocks quotes in this article: CLF

Steel producer Cleveland-Cliffs ( CLF) is scheduled to report its second-quarter results Friday morning. In our April 22 review of CLF we were hesitant about going with a long recommendation. Today we can see that avoiding the long side was a good strategy at the time. How do the charts look now?  

In this daily bar chart of CLF, below, we can see that prices have been cut in half in a short period of time. CLF is trading below the declining 50-day moving average line and below the weak 200-day line. The daily On-Balance-Volume (OBV) line shows a decline from early April and only some slight improvement in July. The Moving Average Convergence Divergence (MACD) oscillator has crossed to the upside for a cover shorts buy signal but remains below the zero line and an outright buy message. 

In this weekly Japanese candlestick chart of CLF, below, we can see that prices are finding some support or buying interest in the $16-$14 area. The slope of the 40-week moving average line is negative. The weekly OBV line is in a downward trend. The MACD oscillator is bearish. 


In this daily Point and Figure chart of CLF, below, we can see a potential downside price target in the $8 area. 

In this weekly Point and Figure chart of CLF, below, we can see the same daily chart price target of $8. 


Bottom line strategy: The broad market averages are in the process of a recovery rally but that may not be enough to get CLF going on the upside even after a 50% correction. CLF could bounce but there are other stocks with better setups at this point in time. 

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