The earnings season kicks off with a report from Alcoa Inc. (AA) which is engaged in lightweight metals engineering and manufacturing in four segments: Alumina, Primary Metals, Global Rolled Products, and Engineered Products and Solutions. The stock is currently trading around $10.62 at the lower end of its 52 week range of $10.58-$17.75. The stock has been under performing the market this year falling 32.84% year to date. AA is scheduled to report earnings after the closing bell today, and the stock is very bearish today falling by $0.46 or 4.16% on the session ahead of the close.

Over the past 12 quarters AA has rallied on earnings day 4 times with an average move of 2.75%. The stock appears bearish on a chart going into the release having traded below or in the Ichimoku Cloud for the past few months since early March on the daily bars. Over the past 12 quarters AA has rallied from earnings to the nearest options expiration 3 times with an average move of 3.74%. The stock looks as if it could continue today’s trend and lower in today’s session. Investors are looking to see if the high demand from aerospace and automotive markets has grown 9%-10% as projected. Investors are also hoping to see favorable results from the aggressive cost cutting and productivity improvements actions made by the company.

The options market is currently implying a move of around $0.58 or 5.4% in AA by this Friday’s close giving us targets of $10.01 and $11.17.

Andrew Keene

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