Alcoa Inc could not rally together with its commodities counterparts. CENX, FCX, X, ACH are rallying while Alcoa Inc is dragged lower by the DOW.
Alcoa actually reached $14 as shorts started to panic. However, the stock is still shorted by some funds as a hedge. This stock has a short percentage of 7%. The highest among all the DOW stocks. Most probably, there will be more short covering by this week.
Anyway, all targets remain the same. The resistance at $13.90 is no longer a strong resistance. The next resistance ahead is $14.4 and $14.8 before the strongest resistance at $15.3.
This is a pure ALUMINUM play. Note that aluminum stock pile at LME is at its 6 months low. This is why Aluminum price has gone up to $1 and it is now stable at 98cts/lb. Morgan Stanley has been using 80cts as its 2010 average price. An upgrade for Alcoa will happen really soon.
Recently, UBS has upped their 2010 aluminum price to $1.15/lb. They are becoming very optimistic about Aluminum which was the major laggard last year. All commodities have risen more than Aluminum.
Demand is picking up as AUTO sales are increasing as compared to last year. Chicago aluminum warehouse has been seeing a low inventory level recently. This has pushed Aluminum premiums up.
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