Whilst it’s been a stellar year for Microsoft shares, for Alcoa the opposite is true as the share price continues to fall relentlessly, and if this were considered a bellwether stock, markets would be on their knees by now. From a fundamental perspective the fall in the share price mirrors the fall in global revenue for this behemoth company, which has seen a slow and steady decline from $3.6 billion in Q2 2018, falling to $2.7 billion for the most recent results, and the only glimmer of hope for investors is this was the same as for the last quarter.
From a technical perspective, there is little to suggest we are at a bottom just yet, and it is interesting to note in the recent rally in June this was accompanied with falling volume. The volume point of control at $27.40 per share is also adding further downward pressure as we move into yet another phase of congestion between $24 to the upside and $20 to the downside with strong areas of resistance above at $26 and $30 per share and which are likely to be key in any longer term rally higher.
For longer term investors, this is one to have on the watch list as undoubtedly the fundamentals will improve and be reflected in the technical picture with the market makers then buying in volume before testing and taking the stock higher, first with a return to the volume point of control itself and then on to the $30 per share region. At this point, the stock would then have a strong platform below, and provided the move higher is supported with good volume, this might be the time to consider reinvesting in Alcoa for a longer term buy and hold with a run to $40 per share then likely. And in this vein, 2 weeks ago saw the first hint of buying, a small sign perhaps of better times ahead for Alcoa? However, the technical picture also needs to read in conjunction with what is happening with the current US-Sino trade talks which so far show little sign of any resolution.
By Anna Coulling
Charts from NinjaTrader and indicators from Quantum Trading
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