United States Steel Corporation (NYSE:X) crashed by 11.61% yesterday after a few days of consolidation in the narrow range of $26-$28. The volume surged to a two month high of 25 million against the daily average of 8 million only. The market didn’t like the less than stellar earnings the company announced yesterday.
The street was expecting United States Steel Corporation (NYSE:X) to post earnings of $0.12 per share but the company actually reported a loss of $0.52 per share, amounting to $75 million. The first quarter revenue saw a dramatic decline by 26% from the last year but the most disappointing news turned out to be the reduction in full year EBITDA guidance. The previous guidance was in the range of $1.1 billion to $1.4 billion, which was reduced to the range of $700 million to $900 million this time.
United States Steel Corporation (NYSE:X) blames the poor performance on an acceleration in the volume of steel imports in the Q1 and a drop seen in the tubular results due to reduced drilling activity caused by low crude prices. On the other hand, the unit production costs of the company saw a dramatic increase as the production was lowered.
Technically the weakness is well evident on the charts too as the stock has lost almost all the gains made in the first few months of the current calendar year. The period of October 2014 – January 2015 saw a steep decline from $42 to $20 and that was followed by a labored bounce to $28 levels. The bounce looks over with the price action yesterday and the pattern of Bearish Flag suggests more downside can’t be rule out. The Bearish Flag pattern will be triggered on a break below $22 levels and in that case, the minimum target would be $20 levels but a retest of $10 levels can’t be ruled out.
