By Takeover Analyst:Wall Street analysts are currently showing no love for three major aluminum miners. Given macro headwinds, cost pressures, and high volatility, the consensus is that the vulnerable fundamentals of Alcoa (AA), Norsk Hydro (NHYDY) and Century Aluminum (CENX) all warrant a "hold" rating.
By Sammy Pollack:The price of aluminum has been under pressure for a myriad of reasons. Here are the most important.
Weaker global economy due primarily to Europe and China
Oversupply of aluminum resulting from overproduction
Stronger U.S. dollar
The chart below shows the price of Aluminum over the past year.
The leading producers of Aluminum have tracked the price very closely.
Jeff Pierce submits: The iPath DJ-UBS Aluminum ETN (JJU) is the exchange traded note option, which gives exposure to a basket of aluminum futures and is carving out a reverse head and shoulder pattern, which if it breaks out should well take this index over $40. The RSI has a clear downward sloping RSI line that could be an early tell if this index starts to move (click on chart to enlarge).
The S&P/TSX Diversified Metals and Miners Index is up roughly 4.5% since December versus a 6% decline in emerging market equities and only a slight gain for the Canadian benchmark S&P/TSX Composite.
This may seem counter-intuitive given Canadian commodity companies’ dependency on developing market demand, but Martin Roberge at Canaccord Genuity has an explanation.
Andrew Sachais submits:As earning season approaches, it seems as if the market is putting more emphasis on its outcome. After discouraging jobs data on Friday, the VIX showed little upward change. This observation gives way to the inference that the market expects earnings data to provide positive upward pressure.Leading off the earnings announcements is Alcoa (AA).
By Takeover Analyst:In an earlier article, I described the negative attitude surrounding aluminum and depicted the extent to which Alcoa (AA), a brand-name miner, will experience free cash flow burn. Since I first wrote the article, the stock has fall by 9.2% while the S&P rose by 3.4%.