ArcelorMittal stock (NYSE: MT) saw an impressive rise of 87% in the last six months and is currently trading at $23 per share. Such a healthy rise was driven by a recovery in global steel prices. Additionally, the lifting of lockdowns over recent months has led to expectations of healthy growth in shipments in 2021 as demand gets back on track and supply constraints reduce. Also, the U.S. raw steel capacity utilization for the week ending 6th February 2021 was 75%, which is lower than the 81.5% recorded in the prior year period. However, this is an improvement over the 51% utilization in the beginning of May 2020, which indicates that there are signs of a strong rebound in activity in the steel sector. But will ArcelorMittal’s stock continue its upward trajectory over the coming weeks, or is a correction in the stock more likely?
According to the Trefis Machine Learning Engine, which identifies trends in a company’s stock price data for the last 20 years, returns for MT stock average close to 13% in the next three-month (63 trading days) period after experiencing an 87% rise over the previous six-month (126 trading days) period. Notably, the stock is likely to outperform the S&P500 over the next three months, with an expected return which would be 14% higher compared to the S&P500.
But how would these numbers change if you are interested in holding MT stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning to test MT stock chances of a rise after a fall and vice versa. You can test the chance of recovery over different time intervals of a quarter, month, or even just 1 day!
MACHINE LEARNING ENGINE – try it yourself:
IF MT stock moved by -5% over 5 trading days, THEN over the next 21 trading days, MT stock moves an average of 1.4 percent, which implies a return which is similar to that of the S&P500.
More importantly, there is 49% probability of a positive return over the next 21 trading days and 44% probability of a positive excess return after a -5% change over 5 trading days.
Some Fun Scenarios, FAQs & Making Sense of MT Stock Movements:
Question 1: Is the average return for ArcelorMittal stock higher after a drop?
Consider two situations,
Case 1: ArcelorMittal stock drops by -5% or more in a week
Case 2: ArcelorMittal stock rises by 5% or more in a week
Is the average return for ArcelorMittal stock higher over the subsequent month after Case 1 or Case 2?
MT stock fares better after Case 2, with an average return of 2.6% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 9.5% for Case 2.
In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.
Try the Trefis machine learning engine above to see for yourself how Arcelor Mittal stock is likely to behave after any specific gain or loss over a period.
Question 2: Does patience pay?
If you buy and hold ArcelorMittal stock, the expectation is over time the near term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.
Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!
For MT stock, the returns over the next N days after a -5% change over the last 5 trading days is detailed in the table below, along with the returns for the S&P500:
Question 3: What about the average return after a rise if you wait for a while?
The average return after a rise is generally lower than after a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks. However, MT stock appears to be an exception to this general observation. MT stock has given better returns after a rise than after a fall.
MT’s returns over the next N days after a 5% change over the last 5 trading days is detailed in the table below, along with the returns for the S&P500:
It’s pretty powerful to test the trend for yourself for ArcelorMittal stock by changing the inputs in the charts above.
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