Steel's Not Done

The steels are rolling over! I heard that about half a dozen times this week. People, of course, were looking at the chart, not the order book. They were looking at the head-and-shoulder picture, not the price increases and the strong worldwide demand.

One of my favorite stocks is US Steel (X - commentary - Cramer's Take) because of its great, aggressive manager, John Surma, who came into the stock not that long ago at $9! The company is expanding and is largely integrated -- it has all of its own resources that go into steel, except in Europe -- and it's just riding the wave of the great steel shortage.

In order to get negative on steel, you have to see much more capacity coming on -- including greenfield capacity -- along with dumping by foreigners and a pretty severe downturn. No, prices can't go up forever. And when you listen to conference calls, you know that midquarter bumps -- more than one bump -- in price may not be sustainable.

The problem I have, though, is that without fundamental supply and demand imbalances solved, it is hard to see how the rally can't continue.

X has become many peoples' favorite recession short.

To me, it is a non-recession long. Not today. It is up too much. But on any day that the shorts knock it down to levels that seem to reflect the move is over.

Because it isn't.

At the time of publication, Cramer had no positions in the stocks mentioned.

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