PreMarket Prep Stock Of The Day: US Steel

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

The term "sell the news" is used quite often on our show and doesn't always turn out to be the right move. If you track the results, at least in the short-term, it's often correct. Let's apply that concept to U.S. Steel X.

Infrastructure Speculation: Since President Joe Biden has come into office, there has been constant speculation of a large infrastructure bill being proposed, and for good reason.

First of all, many segments of U.S. infrastructure are old and outdated, and some even not safe. Also, as the country emerges from the pandemic, there's a need to create jobs to replace many that may be permanently lost.

Long-Term Players Rewarded: If an investor correctly read the tea leaves and anticipated the move by the administration, they may have started accumulating a long position when the results of the election were official.

Based on the move in U.S. Steel on Nov. 24 ($11.56 to $14.25), this is the day the “big boys” sprung into action. In fact, the issue briefly traded under that level and embarked on a major rally that so far peaked on Wednesday at $27.40. The issue backed off that level to post the high close for the move at $26.13 on heavy volume.

Short-Term Players Rewarded: Let’s assume U.S. Steel wasn't on your radar until last week and you wanted to participate in the speculation, the issue provided a golden opportunity. Following four consecutive down days, the issue bottomed last Thursday at $18.61 and rebounded to end the session at $20.37.

That move was followed by a five-day winning streak up to Wednesday, where the issue added nearly $6, or 28%.

Sell The News: The moment speculators in U.S. Steel were waiting for came after the close on Wednesday. That's when Biden announced a $2 trillion infrastructure and economic recovery package. The plan includes upgrades to U.S. transportation infrastructure, water systems, broadband and manufacturing.

During Wednesday’s show, the active chat audience was clamoring for issues to buy to capitalize on the announcement. Instead, co-host Dennis Dick took a contrarian view based on the prior move U.S. stell has had over the last week.

"Can this be a day when, when you by one the rumor of the event and sell the day of," he asked. "Many of the steel issues had a bad day yesterday, making new highs for move and then retreating."

Price Action: The retreat that started later in the day on Wednesday has continued in Thursday’s session.

After a lower open, the issue was unable to regain Wednesday’s close ($26.17), only reaching $26.03 before it continued its move lower. As of 2:15 p.m., $24.51 stands as the low for the session and the issue is not far off that low.

Based on the daily charts, the next potential area of support comes in at Tuesday’s low ($23.60).

The discussion on the “Sell the news” concept from Thursday’s show can be found here: