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Monday, February 8

ALCOA Bearish chart, BUY to COVER zone

I shorted AA in mid day trading today as there is apparent weakness in the DOW 10000 level.

It is understandable that the sentiment now is fear, and when there is fear, bears grow in power. Bears feed on fear. Thus even though Alcoa is a great buy at this cheap price, fear causes panic selling. Investors are skittish, calling their dealers to sell their shares. Perhaps, they are looking for other safer alternatives such as USD.

Nevertheless, Alcoa does shows strong bull power when it dives to $12.90, however, since this is the 4th time we are heading to $12.90, the bears could be really strong, causing the bulls to bow down and give way.
If such a scenario happens, I think AA would dive to $12.7 where it belongs. Look at the chart, there is strong support there too. And also look how AA price acts before a steep rally.

We are in the midst of the start of a rally. The bulls are bowing down humbly, only to start charging and building investors confidence when the Economic climate gets better.

TRADE ACTION:
BUY TO COVER AA at $12.75 (monitor, if dow gains strength, cover immediately)
BUY TO INVEST AA at $12.75. You can close your eyes for one year, it might be $25. This is a stock pick.

BULL CASE: Recent Price target raises by analysts. Materials will gain in a recovery market no matter how slow. This is because production will start picking up.

Bear case: It is a bear market. Other sector might be a better buy.
AA feb 8] 

Disclaimer: This stock pick is based on my opinion. Do your own due diligence before making your investment. Contact your own financial advisor for investment advice.

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