FEAR, GREED OR STUPIDITY?
7 October 2009 by Cullen Roche
5 Comments
Alcoa shares are surging on big volume just moments before their earnings release. The stock is up over 10% this week already. It just begs the questions – is this fear based short covering? Is this greed based momentum chasing? Or is this just the sheer stupidity of investors who know more than they should about AA’s results? We’ll find out in a few minutes….
I’d go with stupidity. The AH action is bizarre. As is the CEO’s comment about inventories being low (they’re not). But I guess everyone is so desperate to put all the cash to work that they’ll buy nearly anything. In 2010 this company won’t even make $1 EPS.
This stock is trading at 20x forward earnings if Alcoa can manage 75 cents in earnings over the next year. Anyone think they can manage that, half that? I get trading momentum but this seems insanely dangerous.
The management disclosure item about low aluminum inventories was breathtakingly misleading. There is 3x as much aluminum at the LME as there was at the end of the last bear market.
Futures up big 10.8 points after hours on approx close 1058 put S&P about 1068.8, very close to another all time high. Amazingly big on just one company. Will S&P break all time highs for each company? Who knows?
Looks like tomorrow morning cash will be worthless so everyone better take advantage of AH trading to get some aluminum to hedge.
I smell end is nigh.
Market rally is about to end… maybe a sell-off to 900-950 with the decline starting during earnings season (I expect a gap and crap), and possibly back to new high. Maybe a small decline would attract some retail investors so some of them would believe the rally is real. This is the set-up needed for the S&P needs to retest the March low as it is a much bigger decline.