Alcoa (AA) Chart – 4/7/09

I drew the AA Chart below at 12:05 pm on Tuesday, April 7, 2009 when AA was trading at $7.77.  Alcoa is scheduled to release earnings after hours today.

• AA hit resistance when it met up with its trend line of lower highs from the past six months three days ago
• AA hit resistance on the same day with its trend line of higher highs from the past nearly two months
• AA broke support at its 10 day moving average yesterday and then recovered above the same line before close
• AA opened below its 10 day moving average and is still below up at noon today
• The 20 and 50 day moving averages are starting to make a bullish crossover
• Support could be around the horizontal line I drew at $6.85, the intraday low in November
• Williams %R is close to breaking below overbought on the 14 and 28 day indicators

Opinion = Earnings tonight will play a major roll in which direction AA tilts tomorrow.  Technical analysis can tell us how far either move could take Alcoa.  Watch %R to see if it breaks tomorrow.  If it does, AA is a sell until it gets near $6.85 and then the risk/reward might switch to being neutral or bullish.  The first two bullets above show how the colliding trend lines kept AA down.  Good earnings could break the longer trend line and still keep the shorter trend line of higher highs intact.  I’m waiting until tomorrow to put my money at risk without a clear indication of direction showing up yet.  If anything, downward is the slight lean I have right now from this chart, but not enough to risk a trade on it.