Alcoa Held Support

Alcoa

, along with other cyclicals, have

during the first 6 weeks of trading in 2012. The stock re-tested recent lows at the tail end of December near 8.50, before rallying 23% testing $11 dollars in early February. Weakening aluminum prices have been a headwind for the company. Alcoa stock price dropped below the 20-day moving average, but seems to have held support levels near the lows created in early February near $10.05. Resistance is now seen near the 20-day moving average at $10.40. A rally back to the highs near $11 could create a small head and shoulders top, unless price action is able to break through the recent highs. Target support on AA is seen near the 50-day moving average near $9.70. In mid-January, the 20-day moving average crossed above the 50-day moving average, which is usually a sign of a medium term trend. The RSI (relative strength index) is very close to 50, which is generally considered a neutral reflection of market conditions. The RSI has only touched the oversold level once in the last 6-months, which was in early October, and has not shown any readings that could be considered overbought. The MACD (moving average convergence/divergence index) created a sell signal when the spread (the 12-day moving average minus the 26-day moving average) crossed below the 9-day moving average of the spread. This sell signal occurred on Monday of this week pushing the index reading below zero for the first time in 2012. Traders should look for a break of the $10-$11 range to determine the direction of AA in the short term. A break above $11 would likely target $12, while a break below $10 would target support near $9.70.