By Nigam Arora & Dr. Natasha Arora
Nigam Arora answers your questions about investing in stocks, ETFs, bonds, gold and silver, oil and currencies. Have a question? Send it to Nigam Arora.
We are fortunate to have very smart and resourceful members. Many of our members have noticed that three different famous gurus are pitching investors to buy aluminum stock Alcoa (AA). AA was included in the Dow Jones Industrial Average for a long time. It was removed when the market capitalization fell too low.
The pitch is simple.
- Russia is a major producer of aluminum.
- AA stock has been running up.
- These gurus are trend-following gurus.
In our analysis, the logic behind these famous gurus’ calls is flawed.
- There are huge stockpiles of aluminum in the world outside of Russia.
- These stockpiles can last for months.
- There are no sanctions by the U. S. or the EU on aluminum.
- Biden administration has specifically stated that they have no plans to ban aluminum imports from Russia.
- China is the biggest user of aluminum.
- China is also a big exporter of aluminum products.
- Russia can simply shift to sending more aluminum to China and China, in turn, can sell more aluminum products to the U. S. and Europe.
- The cost of producing aluminum is going up and that is not good for AA.
- In our analysis, demand for aluminum may be peaking. When demand peaks, prudent investors sell to the trend following the momo crowd because the momo crowd does not look ahead or do deep analysis.
- Ultimately momo crowd becomes the bagholder and the wealth gets transferred from the momo crowd to smart money.
Yesterday, ZYX Change Method gave a signal to short sell AA. Here are the key points.
- Since the signal AA has fallen about $5 in one day.
- If the signal was published, it would have been a nice trade.
- The signal was not published for the following reasons.
- Yesterday when the system was signaling a short signal on aluminum, there were already other short signals.
- Yesterday a short signal was given on oil and that signal has proven spot on. The short sell trade on oil is nicely profitable and today a signal was given to take partial profits. For those who do not short sell, a signal was given on inverse oil ETF SCO and that trade is nicely profitable.
- Yesterday a short signal was given on oil stock OXY. That trade hit the target zone the same day producing very nice profits.
- A signal was given to short sell wheat. That trade is nicely profitable now.
- It is important for investors to control risk. One of the risk management techniques we use is to diversify by strategies.
- The three short sell signals that were given yesterday belong to the same strategy.
- Publishing the aluminum short sell signal that belonged to the same strategy would have increased the risks.
Scroll down for Related Posts, if any.
To take a free 30-day trial to paid services to gain access to more opportunities, please click here.
This post was just published on ZYX Buy Change Alert.
Markets can generate substantial wealth for knowledgeable investors. NOW YOU TOO CAN ALSO SPECTACULARLY SUCCEED AT MEETING YOUR GOALS WITH THE HELP OF THE ARORA REPORT. You are receiving less than 2% of the content from our paid services. …TO RECEIVE REMAINING 98% INCLUDING MANY ATTRACTIVE INVESTMENT OPPORTUNITIES, TAKE A FREE
TRIAL TO PAID SERVICES.