Cleveland-Cliffs stock (NYSE: CLF) dropped more than 8% over the last one week (five trading days). This was due to overall weakness in the steel market. Stocks of other steel companies like U.S. Steel Corp and Commercial Metals company also declined over the last week. Steel prices recovered significantly in the second half of 2020, however, the market is not expecting the prices to remain elevated for long. With capacity utilization rising over the last few months as companies have been ramping up production to meet rising demand, supply of steel is likely to go up. The reduction in the demand-supply gap in the coming months is also likely to lead to some drop in global steel prices. Additionally, China has announced that it plans to cut its crude steel production, which would mean low demand for iron ore in China. This is also expected to put pressure on iron ore prices, affecting CLF’s entire business – steel as well as iron ore segments. In comparison to CLF’s 8.2% drop, the broader S&P 500 decreased 3% over the last five trading days. Now, is CLF stock set to decline further or could we expect some recovery? We believe that there is a 52% chance of a decline in CLF stock over the next month (21 trading days) based on our machine learning analysis of trends in the stock price over the last ten years. See our analysis on CLF Stock Chance Of Decline for more details.
Five Day: CLF -8.2%, vs. S&P500 2.9%; Underperformed market
(16% likelihood event)
- Cleveland-Cliffs stock declined 8.2% over a five-day trading period ending 4/9/2021, compared to broader market (S&P500) rise of 2.9%
- A change of -8.2% or more over five trading days is a 16% likelihood event, which has occurred 408 times out of 2516 in the last ten years
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Ten Day: CLF 18%, vs. S&P500 5.8%; Outperformed market
(10% likelihood event)
- Cleveland-Cliffs stock rose 18% over the last ten trading days (two weeks), compared to a broader market (S&P500) rise of 5.8%
- A change of 18% or more over ten trading days is a 10% likelihood event, which has occurred 260 times out of 2511 in the last ten years
Twenty-One Days: CLF 12%, vs. S&P500 6%; Outperformed market
(25% likelihood event)
- Cleveland-Cliffs stock rose 12% the last 21 trading days (one month), compared to the broader market (S&P500) rise of 6.0%
- A change of 12% or more over 21 trading days is a 25% likelihood event, which has occurred 628 times out of 2500 in the last ten years
Out of 405 instances in the last ten years that Cleveland-Cliffs (CLF) stock saw a five-day decline of 8.2% or more, 209 of them resulted in CLF stock declining over the subsequent one-month period (21 trading days). This historical pattern reflects 209 out of 405, or about 52% chance of drop in CLF stock over the coming month.
While CLF stock may have moved, 2020 has created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised how the stock valuation for Compass Minerals vs Southwest Gas shows a disconnect with their relative operational growth. You can find many such discontinuous pairs here.