What Alcoa's Stock Is Telling Investors About Broader Market - CNBC

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What Alcoa's Stock Is Telling Investors About Broader Market

CNBC.com | July 10, 2012 | 04:02 PM EDT

While some investors consider Alcoa?s earnings a bellwether for corporate profits, what the stock does after the aluminum giant reports quarterly results may be a better indicator for the market.

And right now, the stock?s [ AA?8.35? -0.05 (-0.60%) ] decline of more than 4 percent?despite Monday's slightly better-than-expected results?could be signaling bad news for the market.

"History would say we should definitely be worried over the coming weeks," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research.

Over the past 26 quarters, Alcoa's stock closed higher 10 times and lower 16 times the day after the company reported earnings.

When the stock closed higher, the S&P 500 rose the next month some 70 percent of the time, with an average gain of 2.2 percent.

When Alcoa closed lower, the S&P was down more than 50 percent of the time, with an average loss of 0.7 percent.

?As random as it sounds, the findings suggest there could be significance on the first day that Alcoa trades?there could actually be some type of overall correlation,? said Detrick.

The Dow component posted quarterly earnings and revenue that edged past Wall Street?s expectations Monday afternoon, even though prices for its aluminum were almost near a two-year low.

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Source: http://www.cnbc.com/id/48134650

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