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With Alcoa (AA - 35-1/4) apparently being rewarded by the Street with a positive earnings report, one has to wonder if this could be a positive in the earnings arena. Unlike previous quarters, shares of companies were severely beaten-up on what seemed to be good quarterly reports (forget about those that did not measure up!).
AA exceeded Street expectations by three cents per share for the fourth quarter. The company attributed gains from acquisitions and cost-cutting strategies adding to the bottom line. On the other hand, higher energy costs and weakness in the construction and transportation markets detracted from the bottom line.
The shares have forced their way above the 35 level that had capped the brief rally attempt in August, on their way to early gains of over seven percent on the day. A 2-3/8-point gain for AA shares translates to a 15.45 point gain for the Dow Jones Industrial Average (INDU - 10661).
Short interest on AA exploded by 65 percent over the last reporting period to 13.9 million shares. Based on its 30-day average trading volume, that translates to a short interest ratio of 4.12. Not too hefty, but sufficient to help spark today's rally.
Of the analysts covering the shares, 17 rate them a "buy" or better, four have AA as a "hold", while one lists the company as an outright "sell."