Key aluminum producer Alcoa Corp. ( AA) was cut to a "peerperform" rating by a sell-side firm Thursday, but the stock price has been under selling pressure for several months now on weaker prices for its product and soaring costs.
Let's check out the charts of AA and see what's going on. 
In the daily bar chart of AA, below, we can see that the shares turned lower back in early April probably in reaction to the March spike in Dutch T.T.F. natural gas futures. AA declined to a low in July followed by a six-week recovery rally. AA is pointed down and retested the July lows. The shares look poised to make new lows as they trade below the declining 50-day moving average line and the 200-day moving average line.
The On-Balance-Volume (OBV) line is weak and rolled over in August. Sellers of AA are more aggressive than buyers. The trend-following Moving Average Convergence Divergence (MACD) oscillator is back below the zero line is negative territory.
In the weekly Japanese candlestick chart of AA, below, we see a bearish picture. The shares are in a longer-term downtrend below the weakening 40-week moving average line.
The weekly OBV line has been soft since March. The MACD oscillator is bearish.
In this daily Point and Figure chart of AA, below, we can see a potential downside price target in the $31 area.
In this second Point and Figure chart of AA, below, we can see a price target in the $10 area.
Bottom-line strategy: The weekly Point and Figure chart of AA suggests that share prices are in for a big decline. What could prompt this? Perhaps a combination of weak demand for aluminum and soaring electricity costs to refine the metal. Avoid the long side of AA.
