Take Some Profit in Alcoa
Aluminum prices have risen almost 8% in the past week as the global supply situation continues to tighten.
Top producer China’s output fell in November by around 5% from a year ago to its lowest in 18 months as production curbs remain in place throughout the country. Supply disruptions are also a factor as the major Chinese manufacturing province of Zhejiang is dealing with a Covid outbreak.
The bullish fundamental backdrop for the metal has buoyed the stocks of aluminum companies, most notably Alcoa (AA). We initiated a long position in AA last Thursday, and already the stock is up 16% from our initial entry price.
Our trading rule of taking some profit whenever a metal stock exceeds 10%-to-12% (due to the inherent cyclicality of commodity-related stocks) has now been invoked. Accordingly, I recommending selling half your shares and booking some profit in AA after the latest rally. SELL A HALF