NEW BEARISH Plays
Cliffs Natural Resources - CLF - close: 20.09 change: -0.31
Stop Loss: 20.85
Current Gain/Loss: unopened
Entry on October -- at $--.--
Listed on October 09, 2013
Time Frame: exit PRIOR to earnings on Oct. 24th
Average Daily Volume = 6.6 million
New Positions: Yes, see below
Why We Like It:
CLF is in the basic materials sector. The company mines iron ore and metallurgical coal.
It's been a rough couple of years for CLF. This stock was trading at $100 a share back in summer of 2011. Plunging prices for iron ore was a major culprit behind the sell-off. CLF has recently made some labor agreements that reduce some of the unknowns surrounding the stock but investors remain cautious. Renewed worries about a slowing Chinese economy could impact all of the mining-related stocks. I do want to point out that there are already a lot of traders bearish on CLF. The most recent data listed short interest at 34% of the 152 million-share float. That does raise the risk of a short squeeze. Therefore I am suggesting we use small positions or readers may want to buy put options to limit their risk.
Currently CLF is hovering just above key support near $20.00 and its simple 100-dma. Today's low was $19.88. I am suggesting a trigger to open small bearish positions at $19.75. If triggered our target is $16.25.
However, we do not want to hold over CLF's earnings report on October 24th.
FYI: The Point & Figure chart for CLF is bearish with a $15.00 target.
Trigger @ 19.75 *small positions*
Suggested Position: short CLF stock @ (trigger)
- (or for more adventurous traders, try this option) -
Buy the NOV $20 PUT (CLF1316w20) current ask $1.62