One of the nice things about “boring” markets is that they do not require a lot of “rethinking of things,” and given just how resilient this market has been in the face of all that has been thrown at it over the past four weeks, I am comfortable with my recent outlook. Cleveland-Cliffs Inc. (CLF) remains attractive here, remarks Nate Pile, editor of Nate’s Notes.
Four out of five of the major indices that I use to gauge the health of the overall market are still flashing "bull market" signals for us, holding above their “Eyebrow Levels.” Though the lone index that is still below its one eyebrow level (the Nasdaq) is admittedly serving as a spoiler to the clean sweep, it’s also tracing out a pattern that suggests it may have hit its low back in October as well.
As is always the case, there are a number of economic data points that will be coming out that will have the potential to change the trajectory of things on a number of fronts. And though I will be keeping an eye on things and discussing any major changes that I see developing, you are encouraged to keep two of our favorite mantras in mind while you manage your own portfolio, namely:
1) You should always "sell down to your sleeping point" if you are feeling concerned that you own "too much" stock relative to your own outlook.
2) You should also be as disciplined as you can be about always positioning your portfolio based on what the market is actually doing, not on what you think (or are worried) it might do.
What it is currently doing is "trending sideways or higher." Indeed, virtually all of our chip stocks are currently tracing out very bullish patterns. I also especially like the chart patterns associated with Apple (AAPL), Electronic Arts (EA), First Solar (FSLR), Illumina (ILMN), and MannKind (MNKD) these days.
Meanwhile, given how orderly the sell-off in steel producer CLF has been, I am optimistic that once the dust settles around the situation in the banking industry, it will likely find some support and resume the sideways/uptrend that has been underway for a while now.
To be sure, a slowdown in the economy will not be great for the stock. But the company is also well-positioned to benefit from the infrastructure spending that is growing more and more inevitable with each passing year (and will likely only accelerate if the economy starts to falter and the government steps in to "help").
Recommended Action: CLF remains a strong buy under $16 and a buy under $22.
