Can U.S. Steel Corp Stock Sustain The Momentum After Its 50% Rise?

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U.S. Steel Corp stock (NYSE: X) has seen a formidable rise of over 50% in the last six months and currently trades at a little over $25 per share. The impressive rally over the last couple of months was driven by the recovery in steel prices. The lifting of lockdowns over recent months and the successful vaccine rollout has led to expectations of healthy growth in shipments in 2021 and 2022 as demand gets back on track and supply constraints are reduced. Also, stimulus packages and spending on infrastructure is likely to lead to increased demand. Additionally, the U.S. raw steel capacity utilization for the week ending 31st July 2021 was 85%, which is significantly higher than the 60% recorded in the prior year period. This is also a marked 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 U.S. Steel’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 ten years, returns for X stock average close to 0% in the next one-month (21 trading days) period, i.e. the stock is likely to remain flat in the next one month, after experiencing a 50% rise over the previous six-month (126 trading days) period. Also, there is a 46% probability that the stock will give a positive return in the next one month. But how would these numbers change if you are interested in holding X stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning Engine to test X 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 one day!

MACHINE LEARNING ENGINE – try it yourself:

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IF X stock moved by -5% over five trading days, THEN over the next 21 trading days, X stock moves an average of about 1 percent. Also, there is a 48% chance that the stock will give positive return in the next one month following a 5% drop over the previous week.

Some Fun Scenarios, FAQs & Making Sense of X Stock Movements:

Question 1: Is the average return for United States Steel stock higher after a drop?

Answer:

Consider two situations,

Case 1: United States Steel stock drops by -5% or more in a week

Case 2: United States Steel stock rises by 5% or more in a week

Is the average return for United States Steel stock higher over the subsequent month after Case 1 or Case 2?

X stock fares better after Case 2, with an average return of 1% 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 3.2% 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 United States Steel stock is likely to behave after any specific gain or loss over a period.

Question 2: Does patience pay?

Answer:

If you buy and hold United States Steel 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 X stock, the returns over the next N days after a -5% change over the last five 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?

Answer:

The average return after a rise is understandably 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 – although X stock appears to be an exception to this general observation.

X’s returns over the next N days after a 5% change over the last five 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 United States Steel stock by changing the inputs in the charts above.

What if you’re looking for a more balanced portfolio instead? Here’s a high-quality portfolio that’s beaten the market since 2016.

 

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