Alcoa Inc (NYSE:AA) is our next momentum stock play. Alcoa Inc. is the producer of primary aluminum, fabricated aluminum, and alumina, and is active in all major aspects of the industry: technology, mining, refining, smelting, fabricating and recycling. (Source: Bigcharts)

Over the past year, shares of Alcoa have been beaten down a little and seem to be poised to extended gains up and beyond the initial “pop” we have seen in the stock over the past few weeks.

On a one-year weekly chart you will notice our typical MACD and DMI buying signal and the immediate jump once investors and institutional buyers were on board.

Source: Bigcharts

Zooming on the 6-month daily chart you will also notice that this reversal in trend was due. Notice the line following multiple points in price downward while the MACD and RSI started to trend upward. In this case it wasn’t until the RSI indicator began showing signs of reversal that the market started to turn this stock around.

Source: Bigcharts

In the same 6-month daily chart I have mapped out the downtrending resistance line from which the breakout point occured.

This just goes to show that the signs are there, you just have to know where and what to look for!

Our Recommendation: Buy shares of Alcoa (AA) at or near $30.71 and place a stop of 5% below your purchase price.