ARCELORMITTAL SA – BREAKOUT
Trend: Short term up. Medium term turning up. Long term technically down.
Strategy: Buy for more follow through. After moving sideways for many months and forming a base, ArcelorMittal broke out above two resistance lines last week (lines 1 and 2). That was significant, as it also confirmed a (bullish) inverse head and shoulders (as labelled). The daily stochastic oscillator (on top) is relatively overbought. But any pullback is likely to be temporary until the upside target is met. Buy at current levels (it was trading at 8475c at the time of writing). If the stock pulls back towards line 2 (8200c) then buy more. The minimum upside target (short term) is 8850c – ie, the height of the inverse head and shoulders projected up. That will also be a retest of its August highs. Take most trading profits there. But medium term this stock has the potential to reach R100: so pullbacks will continue to be buyable. The initial stop-loss is a close below 8125c.