What’s Behind The Recent Surge In Alcoa Stock?

Alcoa stock (NYSE: AA) jumped 7.5% in just the last one week and is above $50, completely outperforming the S&P 500 which dropped 1% during the last one week. If you look at the change in stock over the last ten days, AA stock has increased 8.4%, again outperforming the market. The recent rise in the stock price of the aluminum giant was driven by the announcement of its inclusion in the S&P MidCap 400 Index. AA stock will replace Hill-Rom Holdings (HRC) in the index on 20th December. Also, a majority of analysts are bullish on the stock, with a large majority carrying a “strong buy” rating on AA stock. Aluminum is a critical metal for decarbonization and will likely continue to see increased demand compared to steel given its lightness (aluminum is about one-third the weight of steel) and easy recyclability. The push for electric vehicles will also drive demand for aluminum as EVs contain 30% more aluminum compared to internal combustion engine vehicles.

Now, is AA stock set to rise further or could we expect some correction? We believe that there is an equal chance of a rise and fall in AA stock over the next month (21 trading days) based on our machine learning analysis of trends in the stock price over the last five years. See our analysis on AA Stock Chance of Rise.

Twenty-One Day: AA -2.8%, vs. S&P500 -0.8%; Underperformed market

(39% likelihood event; 50% probability of rise over next 21 days)

• AA stock decreased 2.8% the last twenty-one trading days (one month), compared to a broader market (S&P500) drop of 0.8%
• A change of -2.8% or more over twenty-one trading days is a 39% likelihood event, which has occurred 501 times out of 1277 in the last five years
• Of these 501 instances, the stock has seen a positive movement over the next twenty-one trading days on 252 occasions
• This points to a 50% probability for the stock rising over the next twenty-one trading days

Ten Day: AA 8.4%, vs. S&P500 1.7%; Outperformed market

(23% likelihood event; 58% probability of rise over next 10 days)

• AA stock increased 8.4% over the last ten trading days (two weeks), compared to a broader market (S&P500) rise of 1.7%
• A change of 8.4% or more over ten trading days is a 23% likelihood event, which has occurred 290 times out of 1288 in the last five years
• Of these 290 instances, the stock has seen a positive movement over the next ten trading days on 169 occasions
• This points to a 58% probability for the stock rising over the next ten trading days

Five Day: AA 7.5%, vs. S&P500 -1.1%; Outperformed market

(17% likelihood event; 56% probability of rise over next five days)

• AA stock increased 7.5% over a five-day trading period ending 12/14/2021, much higher compared to the broader market (S&P500) decline of 1.1%
• A change of 7.5% or more over five trading days (one week) is a 17% likelihood event, which has occurred 217 times out of 1293 in the last five years
• Of these 217 instances, the stock has seen a positive movement over the next five trading days on 121 occasions
• This points to a 56% probability for the stock rising over the next five trading days

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[1] Month-to-date and year-to-date as of 12/15/2021
[2] Cumulative total returns since 2017

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