Schaeffer's Trading Floor Blog

Earnings Alert: Alcoa as Broad-Market Barometer

Can AA's post-earnings direction predict the broader market's next move?

by 4/10/2012 1:20 PM
Stocks quoted in this article:

Dow component Alcoa (AA) reports its first-quarter earnings after the close tonight. Looking at data since 2005, the direction AA takes after reporting earnings seems to be a good indicator for the market. The first table shows S&P 500 Index (SPX) returns if AA is positive the day after reporting earnings. The average return and percent positive are significantly better compared to the second table, which shows returns if AA is negative.

SPX after AA earnings

And here are the individual results going back to 2010. AA had a positive reaction following its last report, in January, and it was a good sign for the market. The time before that, though, AA was down significantly -- but the market rallied anyway.

SPX after AA earnings


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