NEW YORK (TheStreet) -- The aluminum, alumina and related products producer Alcoa (AA) - Get Report has suffered from the general malaise in a weak materials sector. The stock never really recovered from the crash of 2008. But Alcoa has rebounded from its "Black Monday" low of Aug. 24 with a huge bounce back of 37.3%, even though the stock is in bear market territory -- 38.4% below its multiyear intraday high, set in November 2014.
This makes it a tough time to report quarterly results. Alcoa stock has been under a technical "death cross" since Feb. 23. (A "death cross" occurs when the 50-day simple moving average declines below the 200-day simple moving average. This formation is a warning of further declines ahead.) Alcoa suffered a price gap lower of 6.1% on "Black Monday" and continued lower until the low of $7.97 on that day.
Analysts expect Alcoa to report earnings of 15 cents a share after the closing bell on Thursday. Alcoa faces declining aluminum prices, but last week the company disclosed plans to split in two in the second half of 2016. A potential bottoming of aluminum prices could offset negative China-led reduced demand as weakness in emerging markets economies continues.
Here's the daily chart for Alcoa.
Courtesy of MetaStock Xenith
The daily chart shows that Alcoa had a close of $10.94 on Wednesday, down 30.7% year to date and in bear market territory -- 38.4% below its 52-week intraday high of $17.75, set on Nov. 21, 2014. The stock had been trading below a "death cross" since Feb. 24, when the stock closed at $15.74. The 50-day and 200-day simple moving averages are now $9.51 and $12.55, respectively, with the stock between these two levels.
Shares of Alcoa recovered from the flash crash on "Black Monday," and the stock is up 37.3% from the flash crash low of $7.97. At the Aug. 24 open, the stock gapped lower by 6.1% to as low as $7.97.
On Wednesday, the intraday high for the stock was $11.18.
Here's the weekly chart for Alcoa.
Courtesy of MetaStock Xenith
The weekly chart for Alcoa shifts to positive from neutral, given a close on Friday, Oct. 9 above its key weekly moving average, shown in red at $9.91. The weekly momentum is projected to rise to 45.71 this week, up 38.41 on Oct. 2. This week's high of $11.18 tested the 200-week simple moving average of $11.05.
Momentum scales from 00.00 to 100.00, with a reading below 20.00 oversold and a reading above 80.00 overbought. This study is shown in red along the bottom of the chart.
Investors looking to buy Alcoa should place a good till canceled limit order to purchase the stock if it drops to $9.43 and $7.33, which are key levels on technical charts until the end of this week and the end of October, respectively.
Investors looking to reduce holdings should place a good till canceled limit order to sell the stock if it rises to $11.92, which is a key level on technical charts until the end of 2015.
This article is commentary by an independent contributor. At the time of publication, the author held no position in the stocks mentioned.