US Steel (X) traded 5% higher on Tuesday morning, after Citigroup (NYSE:C) upgraded the stock to Buy from Neutral. Citi made two points. The first is that steel prices have recently fallen 25%, and the second is their forecast for higher steel prices. As such, Citi increased their price target on X from $43 to $46.
Our analysis of market cycles on US Steel’s weekly chart below indicates that Citi’s call may be off the mark...at least until next month. X is midway through its current market cycle, which is due to conclude in May 2018. Until then, we see additional downside price action, with a target around $31. Assuming the patterns continue to follow what has been very regular cycle rhythms, at that time, buyers can consider picking up some shares.
