Trade ideas can come from anywhere.
But the key to profiting from them is to be able to adapt and drill down to find the right stocks to buy and when.
Some trade ideas come not from screening stocks but by taking major macroeconomic market developments.
Macro developments set up for top-down analysis. This is where we start with a 10,000-foot view from above – and start working down until we find paydirt.
And by paydirt, I mean the top stock that’s set to cash in from the big overreaching development that’s going to drive that stock higher – and in shorter order.
Today, I’m sharing a trade idea and how I put it into action with a specific stock that is above and beyond the stocks inside the Watch List for Traders Daily Direction.
For the full Watch List for this week, click here now.
Hot-Rolled Steel
Steel prices are skyrocketing.
The commodity is up 246% over the last year as measured by the CMX hot-rolled steel contract that is a benchmark for industrial use.
CMX Hot Rolled Steel Futures Price Return Source Bloomberg
We saw a huge rise in material costs in the first half of the year, but most of those materials have since leveled out.
Steel has not. And you can see the market for steel compared to other key resource market prices below:
IMAGE: https://www.tradingview.com/x/3gu9SIgS/
This has been bullish for steel stocks.
The VanEck Vectors Steel ETF (SLX), an exchange-traded fund (ETF) comprised of a basket of major steel producers, has readily outpaced the market.
IMAGE: https://www.tradingview.com/x/OfignxXn/
But the move is not yet over.
In fact, this could be just the beginning…
Several big names are setting up for potential breakouts.
US Steel (X), Nucor (NUE) and others are all trying to come out of consolidation bases.
Each is within striking distance of new highs – a move that could trigger a second wave of higher prices.
But the stock that got my attention as the paydirt play from this big macro market development is Steel Dynamics (STLD).
The stock has already returned 130.2% over the trailing year, so it is onboard the macro market trend – but there is more to go.
I took a small position in Steel Dynamics Monday morning when it broke the handle at 63.60.
IMAGE: https://www.tradingview.com/x/ndQnV43q/
I’m playing this one tight with a stop below last week’s pullback low at 61.40.
But if we can get above 66.00, I will likely add to my position.
I suggest keeping all three of these names on your radar.
These are the top stocks in the top-performing sector right now.
They are market leaders.
And that is where the big money is made… Paydirt for profits.
One Last Thing
Thank you for reading and subscribing to Traders Daily Direction. And we do hope that you’ve been cashing in on so many of the surging stocks that we’ve been presenting each and every week in the Watch List. And again, the full writeups on all of the stocks in the Watch List can be accesses right here: (TKTK).
All of the stocks that we present are vetted by our proprietary Stock Surge Indicator (SSI) system. And again, you can get the full rundown on how this works with the free download of the special report: The Magic of the SSI right here: (TKTK).
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Embrace the Surge,
