Thursday, 9 April 2015

AA - earnings just not good enough

Whilst the main market settled moderately higher, there was notable weakness in Alcoa (AA), which settled -3.4% @ $13.20. Price structure is bearish in the near and mid term. With a clear failure to re-take the old floor in the $14s, there remains viable downside to the $10/9 zone by late summer.

AA, daily

AA, monthly


Q4 earnings were certainly reasonable, earnings were a few cents above market expectations, but AA missed on revenue.

To be clear...

I am long term bullish for AA, but there appears to be viable downside to the big $10 threshold this summer.. perhaps the 9s.. briefly. At that level, I'll be a buyer...on a 18/24 month basis... into 2017.

Target upside from 10/9 would be $25/26.. but that is clearly at least a full year away (unless someone wants to launch a takeover*).

*current market Cap is around $16bn... any takeover would clearly need to be in the $20/25bn zone.. at minimum.