Materials and energy stocks attracted strong buying support Monday amid higher commodities prices. Gold prices jumped $8.20, or 0.6 percent, to $1,295.80 an ounce, and oil futures for June delivery climbed 60 cents, or 0.6 percent, to $100.59 a barrel.
Speaking of materials, Alcoa Inc. (AA) was a notable winner in Monday trading session, jumped 4.23 percent on strong volume to $13.81 – a whisker below the 52-week high set in early May. This is bullish from a technical perspective. In fact, as the chart below indicated, AA could climb above 14.60 to test the 127.2% Fibonacci extension after the downward trend halted. Just so that you know, initially profiled in our February 12, 2014 “Swing Trader Bulletin” AA had gained about 22% and remained well position.
The graphic below is from our “U.S. Market ETF Trading Map”, which show the near-term technical bias and trading ranges for AA. As shown, the underlying is in a short-term bullish trend when the price bars are painted in green. The underlying is in a short-term bearish trend when the price bars are painted in red. The yellow bars identify period of neutral or sideways trading pattern. Additionally, the light-blue shading represents the short-term trading range. A move above or below that range is considered overbought (as represents by the red shading) or oversold (as represents by the dark-green shading). Readings above or below the red and green shaded areas are considered extremely overbought or extremely oversold.
Chart 1.1 – Alcoa Inc. (daily)
As indicated in the above chart, our “U.S. Market ETF Trading Map” rates AA as a Buy. Over the past few days, AA had been trending lower in a short-term corrective mode as it works off the overbought condition. Last week’s correction tested and respected support at the 23.6% Fibonacci retracement of the February-May upswing. Monday’s bullish breakout had helped clear resistance at the early May falling trend line, suggesting that AA might have switched to a new upswing…Click here to read more.
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