Nucor Plunges 9% and Could Be Headed Even Lower

Shares of steelmaker Nucor Corp. (NUE) sank more than 9% Thursday amid the broader market selloff.

What are the charts and indicators suggesting lies ahead? Let’s check.

In the daily bar chart of NUE, below, we can see that the shares broke their two-month uptrend. Prices declined Thursday to close below the 50-day moving average line and right on the 200-day line. The trading volume declined from the middle of September to December suggesting that an underlying weak market advance.

The On-Balance-Volume (OBV) line made a low in late September and a so-so move up from that low. The trend-following Moving Average Convergence Divergence (MACD) oscillator has crossed to the downside for a take profit sell signal.

In the weekly Japanese candlestick chart of NUE, below, I see a weak-looking picture. The shares are weak with a large red (bearish) candle that is just above the 40-week moving average line.

The weekly OBV line did not make a new high for the move up like prices did in November — a bearish divergence and the MACD oscillator is narrowing telling me that the strength of the uptrend has been weakening.

In this daily Point and Figure chart of NUE, below, we can see a potential downside price target in the $115 area.

Bottom-line strategy: Traders who are long NUE should take their profits and stand aside. Traders who have no position in NUE should continue to stand aside waiting for a better buying opportunity in the months ahead.