Feeling a Little Delphic on the Direction of Alcoa

We looked at Alcoa Corp (AA) five weeks ago, and we summed up our strategy: "I assume traders have operated from the long side on AA. I would continue to trade AA from the long side, risking a close below $35 now and look for gains in the mid-$40s."

With prices in the mid-$40s now, it looks like a good time to review the charts and indicators once again.

In this daily bar chart of AA, above, we can see that prices have been in an uptrend since June. Prices are above the rising 50-day moving average line, as well as the rising 200-day line.

The daily On-Balance-Volume (OBV) line has been rising with the price action confirming the advance. A rising OBV line tells us that buyers of AA have been more aggressive, with heavier volume being traded on days when the stock has closed higher. In the lower panel, the 12-day momentum study shows a higher high has been made from July to September -- no bearish divergence here to foreshadow a pullback or correction.

In this Point and Figure chart of AA, above, we can see that there were three attempts to break above $44.83 to the next box at $45.28. A trade to $45.28 will be a bullish breakout while the chart currently shows a downside price target of $41.03.

Bottom line: AA could continue higher, as our technical indicators are in good shape. A trade up to $45.28 will be a breakout, but if current weakness in the price of copper spreads to aluminum and other metals, we could see AA pull back to around $41.

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