“My recommendations over the past several months have been heavily skewed towards resource stocks such as LYC, FMG, BHP, MIN, etc. They are clearly in the right part of the cycle, and BlueScope Steel (BSL) is another business that is currently doing very well,” Michael said.
“Last week, they upgraded their earnings guidance ahead of their full year results. Businesses which are growing earnings and upgrading their guidance are the ones whose share prices tend to do the best.
“I believe that BSL is a buy on the back of that earnings upgrade.
“The share price chart is telling me that it still has much further to run.
“BSL has provided us with a textbook case of an upside break from an ascending triangle. We can see on the chart that there had been resistance near $23 since April.
“We have also seen BSL put in some higher lows along the way with the range tightening up. It broke higher last week on good volume (circled).
“Although it hasn’t pushed on, it seems to be holding in there for the time which is a good sign. Having gone nowhere since April, it is now ready to resume its uptrend,” Michael concluded.
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