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Ternium S.A. : TX

Ternium S.A., through its subsidiaries, manufactures and processes various steel products in Mexico, Argentina, Paraguay, Chile, Bolivia, Uruguay, Brazil, the United States, Colombia, Guatemala, Costa Rica, Honduras, El Salvador, and Nicaragua. It operates in two segments, Steel and Mining. The Steel segment offers steel products, including slabs, billets and round bars, hot rolled flat products, merchant bars, reinforcing bars, stirrups and rods, tin plate and galvanized products, tubes, beams, insulated panels, roofing and cladding, roof tiles, steel decks, pre-engineered metal building systems, and pig iron; and sells energy. The Mining segment sells iron ore and pellets. The company also provides medical and social, and financial services. It serves various companies and small businesses operating in the automotive, home appliance, construction, capital goods, container, food, and energy, as well as heat, ventilation, and air conditioning industries. Ternium S.A. was founded in 1961 and is based in Luxembourg City, Luxembourg. Ternium S.A. is a subsidiary of Techint Holdings S.à r.l.

Analysis : TX

  • Ternium S.A. (TX) reported its 2nd quarter earnings on June 2019, beating the consensus estimate by $0.15 cents on a revenue of $2.8 billion. As compared to last year total revenue dropped by 10%. A quick peek at the last few earnings report reveal that it has been constantly surprising the market. (3rd quarter - 55.6% surprise; 4th quarter - 13.3% surprise; 1st quarter - 12.1%, 2nd quarter - 19.5%).

  • On the other hand, TX stock price has been on a decline for the last two quarters. The stock price lost its value more than 50% since Feb 2019 and is now trading less than $17 at the time of writing this article. While economic conditions and new tariffs on Steel and Aluminium are playing a key role in deciding this stocks price, World Steel Association is expecting a turn around in 2019 for this industry.

  • Having said this, where is the stock heading from here? Would the same downward momentum continue?. While the stock is bearish and has demonstrated a strong downward trend, our proprietary pattern recognition system sees an immediate consolidation of its price movement. This stock has likely entered an oversold region. Here are some statistics:

  • The Relative Strength Index (RSI) , a momentum oscillator developed by J. Welles Wilder, measures the speed and change of price movements. The RSI has a range between 0 and 100. Traditionally, the stock is considered overbought when RSI is above 70 and oversold when it is below 30. RSI of Dean Foods Company as of 3.0 is 20. Most recent entry of Ternium S.A. into the oversold territory was on 08/12/2019 and overbought territory was on 02/12/2019.

  • "Buy/Sell" volume ratio is a proprietary indicator that measures the buy and sell volume of a security. This represents the strength of the move in either direction. This oscillator ranges between 0 and 100, however the characteristics widely differ based on the trading volume and momentum. For Ternium S.A. the oversold and overbought is fixed at 62 and 15.

  • Another important volatility indicator to consider is the 14 day ATR (Average True Range) . Average True Range is not a directional indicator and it represents the energy behind the move. Beta coefficient (β) measures the volatility of a stock with respect to the market. Beta for Ternium S.A. is (3Y Monthly) 0.05.

  • The current ratio is a liquidity ratio that measures whether or not a firm has enough resources to meet its short-term obligations. It compares a firm's current assets to its current liabilities, and is expressed as follows: Current ratio = Current Assets/Current Liabilities. If the value is less than 1, it means that the current liabilities exceed current assets and vice versa. Most recent current ratio for TX is 2.30..

  • For reasons explained below, we believe this stock is undervalued and oversold. There is a high probability for this stock to make an upward move (10%) from its current price in the upcoming weeks.

  • We are an investment research organization specializing in financial market analysis and simulation modeling. Our specialty includes financial research & market analysis, financial system thinking, mathematical modeling of trading patterns and near time price prediction of a registered security. We are not a registered investment advisor or a financial advisor or a brokerage firm or an investment company. Please read our disclaimer at http://www.theoryofstocks.com/US/Home/index.php/disclaimer.

  • Financial information cited in this article are taken from Yahoo Finance (http://www.yahoo.com/finance); EPS data is taken from Zacks Research (http://www.zacks.com); some of the definitions have been taken from Wikipedia (www.wikipedia.com)

    Articled by Sraavya Pradeep for TheoryofStocks, LLC

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    Stay Focussed & Watch for Confirmation! Major US Index Analysis (dated: 06/18/2018)

    Here is a quick study on the major US Index viz., Dow Jones Industrial Average, Nasdaq 100, Standard & Poor 500 and Russell 3000


    The Dow Jones Industrial Average, or simply the Dow, is a stock market index that shows how 30 large publicly owned companies based in the United States have traded during a standard trading session in the stock market. The value of the Dow is not a weighted arithmetic mean and does not represent its component companies' market capitalization, but rather the sum of the price of one share of stock for each component company.

    Dow Jones began its decline on January 27th, 2018 after reaching its peak of 26,616. As mentioned in previous articles, a downtrend with an index is represented through lower-highs and lower-lows. As of March 23, 2018, Dow Jones made a new low, continuing a downward trend line. Though many argue that it’s placing is less then 3% of its previous low, it may be reasonable to state that the Dow must cross its near term resistance of 25,709 to sustain its multi-year based bullish trend.

    Interpretation: Dow has likely commenced its downtrend. Stocks to watch in this index that crossed key resistance/support levels recently are: [UNH (Buy), MSFT (Buy), AAPL (Buy)]


    The NASDAQ-100 is a stock market index made up of 103 equity securities issued by 100 of the largest non-financial companies listed on the NASDAQ. It is a modified capitalization-weighted index. The stocks' weights in the index are based on their market capitalizations, with certain rules capping the influence of the largest components. It is based on exchange, and it is not an index of U.S.-based companies.

    In the last six months, Nasdaq-100 has begun to consolidate and is showing less strength to break its all time high of 7578 of March 13, 2018. Unless the current earning season is favorable to the tech sector, NASDAQ-100 may commence a downtrend. NASDAQ is currently following a triple top and will need to break its higher resistance.

    Interpretation: Nasdaq-100 is either consolidating or showing early signs of a possible downtrend. Stocks to watch in this index that crossed key resistance/support levels recently are: [CA (Buy), ROST (Buy), FB (Buy), ADI (Buy), ESRX (Buy)]


    The Standard & Poor's 500, often abbreviated as the S&P 500, or just the S&P, is an American stock market index based on the market capitalizations of 500 large companies having common stock listed on the NYSE or NASDAQ. The S&P 500 index components and their weightings are determined by S&P Dow Jones Indices. It differs from other U.S. stock market indices, such as the Dow Jones Industrial Average or the Nasdaq Composite index, because of its diverse constituency and weighting methodology. It is one of the most commonly followed equity indices, is one of the best representations of the U.S. stock market.

    A closer look at S&P 500 index may reveal a downward trend, however it is important to note that all the trading levels differ by a small margin of 2 to 3%. S&P is also forming a strong resistance at approximately 2,600.

    Interpretation: S&P-500 is either consolidating or showing early signs of a possible downtrend. Stocks to watch in this index that crossed key resistance/support levels recently are: [DISCA (Buy), DISCK (Buy), FTV (Buy), HRB (Sell), RSG (Buy)]

    Financial information cited in this article are taken from Yahoo Finance (http://www.yahoo.com/finance); EPS data is taken from Zacks Research (http://www.zacks.com); some of the definitions have been taken from Wikipedia (www.wikipedia.com)

    Article authored by Sraavya Pradeep for TheoryOfStocks, LLC
     

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