Iron and Coal Production

Editor's Note:

CLF $25.57 -0.01 -- Cliffs Natural Resources Inc.

CLF produces iron ore pellets and mines metallurgical coal for the steel industry. That particular type of coal is normally in big demand. If the global economy is on the verge of turning around then business should be picking up for CLF. We had the stock on our watch list with a buy-the-dip entry point at $23.50. Last week shares hit $23.67 and bounced. I'm upgrading the stock to a full-fledged play. We want to buy LEAPS now. However, I'm also upgrading our stop loss. CLF is bouncing from technical support at it 200-dma but it's also bouncing from its multi-month trendline of higher lows. If CLF breaks that trendline we'll want to exit. I'm listing our stop loss at $22.24. Our long-term target is the $40.00-45.00 zone. More aggressive traders may want to aim for $50. Readers might also want to consider the 2011 January LEAPS instead.

Sept. 5th, 2009 - entry price on CLF @ 25.57, option @ 4.20
symbol: CLF-AE, 2010 JAN $25 LEAP call - current bid/ask $4.00/4.20
-stop loss on CLF @ 22.24

Chart of CLF: