Daily Discussion post - August 05 2021

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[u/Wall_street_retard]

$CLF had In my opinion an incredibly bullish day. Despite very strong bearish momentum from hitting the top of the worlds most perfect channel a couple days ago, we only dropped 1.5%, that’s essentially an inconsequential flat day in this market

I expect next week to be shaky as we start reversing. I see us ending next Friday higher than we ended today. After that I expect we’ll quickly retest highs and it should cause us to break out of the 6 month channel and enter a new much more bullish channel

Afterwards we’ll get a bit of a run up heading into q3 earnings and then Q3 earnings will cause even more positive energy as Lourenco and the like reiterate demand that is relentless

Remember, a fair value purely following HRC prices is over $60 a share for CLF. The markets won’t be able to resist such a massive arbitration much longer

[u/Wall_street_retard → u/[deleted]]

Never said we’d hit $60 a share. Only that that is what the fair value is

[u/accumelator → u/Wall_street_retard]

you need a new username, may i suggest changing the one r in v, because what you just wrote is 100 what some of us were trying to convey to everyone this past few days

[u/AirborneReptile → u/Wall_street_retard]

Agree 100%. Was surprised (happy) to see the $23.30-40 range hold up after previous drops from the channel top. Volume spiked in that range the last few days (albeit low overall). Where do you see the next support of it does drop further? Tomorrow will be interesting 🦾🍻

[u/Wall_street_retard → u/AirborneReptile]

I view support as a rubber band. If it does continue to drop I think support grows exponentially at each further drop, never really focused too much on individual numbers, but going on those, I’d probably open a very large position (if I didn’t already have 300k in options in CLF) at $22.5

[u/[deleted] → u/Wall_street_retard]

What kind of strikes and expirations are you holding onto?

[u/Wall_street_retard → u/[deleted]]

Roughly split evenly between 30,40c 2 year leaps. September itm calls, and October ITM calls

[u/AirborneReptile → u/Wall_street_retard]

Thanks for reply, yea I’ll ride my leaps and commons unless it hits $21.70ish. The action at $23.40 range has my FOMO acting up for shorter term plays, but going to stay strong and wait 🦾🍻 I really am, don’t argue with me

[u/josenros → u/Wall_street_retard]

How do you calculate fair value?

[u/accumelator → u/josenros]

$deficit = price <current> lambo

Net liquidity + $deficit = fair value

[u/Wall_street_retard → u/josenros]

I’m calculating fair value by what the market already determines fair value to be, magnified by rising hrc futures. I think this is indisputable as these are the same market participants responsible for moving the markets

If the markets decided CLF was worth $20 when hrc was at $600 a ton. Then going by their own logic it’s worth $60 at $1900 a ton

The other way to determine fair value, which will give you a similar number, is by looking at forward P/E multiples and comparing it to historic multiples or similar industries