AK Steel Holding Corp - AKS - close: 17.61 change: +0.76

Stop Loss: 15.90
Target(s): 19.75, 22.00
Current Gain/Loss: unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see trigger

Company Description

Why We Like It:
Steel, metal and basic material stocks were showing some strength today. Part of the reason was a much better than expected earnings report from CLF last night. Whatever the reason, shares of AKS shot higher and broke through resistance at the $17.00 level.

More aggressive traders may want to go ahead and buy the stock now. I am suggesting we look for a dip and open positions at $17.25. We'll start with a stop loss at $15.90. AKS can be somewhat volatile so I would consider this an aggressive, higher-risk trade. Readers may want to keep their position size smaller. Investors will also want to note that the most recent data listed short interest at almost 17% of AKS' 108 million-share float. Now I don't think this data is up to date but that is still a high amount of short interest and could fuel some short covering.

FYI: The Point & Figure chart for AKS is bullish with a $27.50 target.

Trigger @ $17.25

Suggested Position: Buy AKS stock @ $17.25

- or -

Buy the March $18.00 calls (AKS1119C18) current ask $0.80

- or -

Buy the June $20.00 calls (AKS1118F20) current ask $0.99

Daily chart:

Weekly chart:

Entry on February xx at $xx.xx
Earnings Date 04/20/11 (unconfirmed)
Average Daily Volume: 8.7 million
Listed on February 17th, 2010