Metal giant Alcoa Corp (AA) was rated a new fundamental overweight (buy) by JP Morgan with a $54 price target. The company is a leader in the production of bauxite, alumina and aluminum.
Let's check out the charts and indicators.
In this updated daily bar chart of AA, below, I see that prices made a low in late September and that low is being retested again in late April and early May. Prices trade below the declining 50-day moving average line and below the declining 200-day moving average line.
The On-Balance-Volume (OBV) line shows strength from September but has shifted to weakness in the past two months. A declining OBV line suggests that sellers of AA are being more aggressive than buyers.
The Moving Average Convergence Divergence (MACD) oscillator is below the zero line but trying to cross upwards to a cover shorts buy signal.
In this weekly Japanese candlestick chart of AA, below, I see some positive signs. The two most recent candle patterns show us lower shadows telling me that traders are rejecting the lows. This is a good thing to observe.
The weekly OBV line is holding steady at the March low. The MACD oscillator is below the zero line but not all that far. Prices still trade below the lagging and declining indicator called the 40-week moving average line.
In this daily Point and Figure chart of AA, below, I see a mixed picture. The chart shows that prices are holding the previous low at $34 but a downside price target of $31 is also being projected by the software.
In this weekly Point and Figure chart of AA, below, the software is looking for a decline to the $23 area. We'll see.
Bottom line strategy: Prices are still pointed down but the lower shadows on the weekly candlestick chart are encouraging. Traders should prepare to be buyers of AA on strength above $40.
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