Editorial Director’s Note: We’re thrilled to announce that John Ross, co-editor of Apex Profit Alert, will be sharing his Chart of the Week with you every Wednesday!
John is an expert in analyzing data and finding patterns. We knew he’d be the perfect person to helm this new weekly feature. Enjoy! — Jessica Cohn
- This stock plunged from its April 2019 high.
- But John Ross identified one reliable pattern that shows it’s set for a 30% climb before the end of the year.
- John’s system has targeted similar gains in recent weeks — and his readers made gains of 163%, 320%, 72% and more in September!
Since last year, relations between the U.S. and China — two of the world’s largest economies — have been tense.
Each country imposed billions of dollars’ worth of tariffs on the other’s goods.
This trade war hasn’t affected the broad stock market in the U.S.
You can see this if you look at a chart of the S&P 500 Index or the Dow Jones Industrial Average — both of which are made up of big companies in nearly every industry.
But trade war tensions affected certain stocks. One stock in particular caught my attention.
Alcoa Corp. (NYSE: AA) is a global aluminum company.
This stock has had a rough ride the last five months.
But take a look at its price chart. The setup looks promising for investors like us who are ready to bet on Alcoa’s comeback.
The stock started to rise back in August. If the rebound continues, my analysis shows Alcoa could rally 30% in the next 30 days or so.
I focus on how prices behave over just a few months at a time.
You see, in the chart, I marked the pattern that’s in play:
- A is Alcoa’s rebound in August.
- B shows the stock’s price decline into October.
- C is the pattern we want to pay attention to. It predicts Alcoa’s rally.
This is my favorite pattern to trade.
And there’s even more to this turnaround story for Alcoa…
Alcoa’s Low Prices: Blame the Trade War and China
Alcoa’s stock began to slide when the U.S. imposed tariffs on aluminum imports in the spring of 2018. Remember, that’s Alcoa’s business.
And the price of aluminum got crushed this summer. It sank from $2,470 per ton in April to $1,720 at the end of September.
That’s a 30% decline in six months. The unresolved U.S.-China trade war is to blame.
That’s because China is the biggest player in global natural resources markets.
In China, people aren’t spending as much money. But Chinese aluminum production hasn’t stopped.
Now China has too much aluminum.
This oversupply hurts aluminum prices and aluminum stocks such as Alcoa.
But low prices mean opportunity for contrarian traders like us. That’s because the stock market is always looking to what’s ahead. It doesn’t wait for investors to catch up to what’s already happened.
News on the trade war scared investors, and it drove Alcoa’s price into the ground. Now the stock’s price is below its true value.
Ride Alcoa’s Rebound Rally
All the news and investors’ fears are distracting the stock market from how important aluminum is. It’s vital in packaging, cars and even airplanes.
You see, there will still be a high demand for this lightweight metal.
We should factor that into the aluminum price and aluminum stocks.
Now, a warning for the risk-averse investors reading this: Alcoa will report its third-quarter earnings in two weeks.
Earnings announcements can always bring increased volatility and surprises.
But the market already knows the trade war sank the price of aluminum — and related stocks.
If Alcoa announces better-than-expected earnings, the stock will rise.
And it should increase going into the earnings announcement.
If you want to use this analysis for profit, consider buying some shares of Alcoa today.
Now, as I said earlier, the price pattern we’re seeing for Alcoa is my favorite pattern to trade.
So much so that Matt Badiali and I used predictable price patterns like this one to build our Apex Profit Alert system.
Our system tell us that Alcoa could rally for the next 30 days. And it looks as if we’re just a few days away from the final signal that lets us pull the trigger on a new trade in Alcoa.
And that’s just one trade we’re watching.
Matt and I can guide you through the volatility and help you make money.
Take a look at how our model portfolio performed for the past month:
Stay tuned for next week’s chart! In the meantime, let me know how you like my new Chart of the Week. Are there any charts or topics you would like me to cover? You can send them my way at firstname.lastname@example.org.
Editor, Apex Profit Alert