Alcoa Corporation is the world's eighth-largest producer of aluminum and a member of the mining and metals sector, which has shown strong performance over the last several years with sustained growth. The first table presents the top two zones of the SIA Market Sector report, where the mining and metals sector is highlighted in a red box. This sector shows a YTD return of 23.18%, with most of the gains (22.50%) occurring in the last quarter. Over the past month, the SIA sector has experienced a slight decline of -0.45%, reflecting a notable pause in momentum as the summer ended. This pause is more clearly seen in the second chart, a 2% scaled point-and-figure chart of the SIA Mines & Metals Equal Weight Index (EWI352). The chart includes the SIA SMAX overlay tool, which helps SIA practitioners quickly assess when this sector is outperforming or underperforming other asset classes, including cash, bonds, commodities, currencies, and equity benchmarks. The chart uses red and green color coding, with red indicating an SMAX score between 0-5 and green indicating a score between 6-10. Notice the pullback in August and September when the sector paused its momentum. However, over the last three months, the sector has rebounded, completing a spread triple top pattern, with the potential for a double top to follow, which would form a catapult formation. The sector's SMAX score is now 9, and the color coding has shifted to green, signaling a recovery. Technically, the sector has made an excellent rebound, and the consolidation period appears to be behind it.
A noteworthy name within this sector is Alcoa Corp, whose shares have shown better relative strength after underperforming during the early part of the sector rally. Alcoa's shares moved up from the low $20s as the sector rose, but the chart indicates that, for the most part, Alcoa has underperformed its peers. The SIA report history overlay tool shows how Alcoa shares have performed relative to its peers in the SIA Russell 1000 Index Report. Until recently, Alcoa was a relative underperformer, but this trend appears to be reversing as the shares have now entered the "Favored" zone of the report. Alcoa has managed this improvement by breaking through resistance levels, particularly the negative trend line. However, challenges remain, as significant resistance zones exist at $46.04, $47.90, and a longer-term resistance range of $53.94-$55.02, with a final resistance point at $64.47. Fortunately, Alcoa shares have established solid support at $40.08, with a longer-term support range at $37.03-$36.30. Currently, shares of Alcoa have an SMAX score of 10 out of 10, indicating strong near-term outperformance relative to other asset classes.
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