Alcoa Corporation announced a 33% ROE. Wait for a lower price

Alcoa Corporation (NYSE:AA) announced Q4 and annual results yesterday. The company beat earnings expectations with a 33% return on equity. For the first time, the company announced a dividend and also highlighted the beginning of a share buyback program.

Alcoa is fundamentally at a strong point. Revenues are growing, and so are the cash flows. The company reduced its debt position, and it has no market or economic exposure to Russia or Ukraine.

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Alcoa announced the results for its best year. These strengths come when inflation is high, interest rates are rising, and in times of war.

Alcoa faces resistance at $90 and RSI reads overbought

Alcoa Corporation closed at $90.69, the highest it has been. The moving averages indicate a bullish trend.

However, a study of the price movements over the last four weeks indicates resistance at $90. The resistance is accompanied by an RSI of 70.82. This is an indication that the stock is overbought. Investors should therefore consider selling Alcoa.

The sell signal is confirmed by the MACD divergence chart, which shows bearish momentum towards convergence. The histogram has started moving downward even though it still is above the oscillator.

Summary

We think Alcoa is a sell at the highs of $90. The company faces resistance at the price, and the RSI reads overbought. Since the company has strong fundamentals, patient investors should wait to resume their positions when the price is slightly lower.

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