BlueScope ex-cellar dweller now looking for blue sky
This week's chart, produced by Gary Burton, a member of the Australian Technical Analysts Association and a senior adviser with Wilson HTM Investment Group, shows BlueScope went into a long descending triangle pattern from late 2008 that saw it fall through a couple of support levels, at $8.95 and $3.23.
In the final down leg the stock fell through a support level at about $2.40, crashing down to $1.46 in July last year. That low point coincided with an underlying loss of $118 million and billion-dollar write-downs.
But what a difference a few months and a change of sentiment can make to the sharemarket. The loss for the December half was a manageable $12 million, a small profit is predicted for the second half and there is some optimism back in the business around the potential of its Asian arrangements with Nippon Steel.
The company is even looking at a $400 million investment in the US through its US joint venture, North Star Steel.
The recent turnaround, in which the share price has risen almost vertically over the past six months, has firmly put BlueScope into an upwards pattern, Burton says. The recovery has been durable to date, with some important resistance points tested and breached.
The first was the $2.40 level that had acted as a support early last year. In hitting that level in August the stock retreated and retested the $2 level. Importantly, $2 proved a support point and BlueScope went through $2.40 and on to breach $2.63. It also encountered resistance at another old support level of $3.23 in October, then went on to push through it in November.
With the stock moving strongly upwards and even breaking through the old downward trend line set by the GFC at $4.38 in recent times, Burton sees a major uptrend developing. That trend has the potential to push the stock up to a resistance point at $6 and beyond. Another major resistance line would be the old support level of $8.95 if the rise continues.
This column is not investment advice. rodmyr@gmail.com
Frequently Asked Questions about this Article…
After being spun out of BHP, BlueScope once reached about $51 (adjusted) but entered a long descending triangle from late 2008. The stock fell through several support levels — around $8.95 and $3.23 — and in the final down leg broke support near $2.40, plunging to $1.46 in July last year. That low coincided with an underlying loss of $118 million and billion‑dollar write‑downs.
The company narrowed losses: the December half recorded an underlying loss of about $12 million and a small profit was predicted for the second half. The article also notes renewed optimism around Asian arrangements with Nippon Steel and potential investments that have lifted sentiment.
Technical analysis by Gary Burton shows the share price has risen sharply over the past six months, breaching several resistance points (including $2.40, $2.63 and $3.23) and breaking the old GFC downward trend line near $4.38 — all signs Burton says point to a developing major uptrend.
Important levels mentioned in the article include support around $2.00 (which held), earlier support/resistance at $2.40 and $2.63, resistance tested at $3.23 and the broken down‑trend at $4.38. If the rise continues, potential upside resistance points cited are around $6 and the old support near $8.95.
The article says there is renewed optimism in the business about the potential of its Asian arrangements with Nippon Steel, and that this improved sentiment has been one factor supporting the turnaround.
Yes — the company is reportedly looking at a possible $400 million investment in the US through its joint venture, North Star Steel, which is cited as part of the positive developments underpinning sentiment.
The chart and technical commentary were produced by Gary Burton, a member of the Australian Technical Analysts Association and a senior adviser with Wilson HTM Investment Group.
No — the column explicitly states it is not investment advice. It presents charting and commentary on price action and company developments rather than a personalized recommendation.
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