Thursday, April 14, 2011

Trade Update: AA

After the run up to $18.5 a pullback in Alcoa AA was not unexpected. Even the large gap and sell off did not worry me, but when AA fell under it's 50 day moving average I almost threw in the towel. Actually I wish I had. The selling volume has been huge and suggest possible exhaustion selling even as the stochastics which have broken down and run away show no sign of turning back up.

With a charitable look at the chart you can try to say that the shares are finding support here at $16.55, but the fundamental fact remains that healthy stocks to not trade for a long time under their 50 dma.

We entered AA at $16.47 and if it goes under that I'd say just let it go. Disappointing sure, but It wont cost us a cent. So, move the stops up to $16.47. Now be sure to watch it in the morning. If it gaps down below $16.47 your stop will be skipped and you will have to sell it yourself. Hopefully it won't be necessary.

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