Monday, December 21, 2009

The very best of all the “JUNK”


Firstly I wanted to sound smart, mobilize my bored brain cells, write something really big, original, that will be remembered in generations of traders (with average lifespan of “new era” trader of about 2 months till full annihilation of account that fame will not stick for too long), but then I decided: What the heck – it is Holiday Season, it is December (I don’t like to trade during December) and I just want to point out to something of utmost importance – I believe I have discovered The Holy Grail of how to make stocks rise.  Bear with me for just a second longer…
As you know today’s gap on (SPX) was, in biggest part, attributed to huge gains in metal producers, such as (AA), (X), (AKS), (TIE).  It has ignited my curiosity and I spent some time trying to figure out what caused that rise.  I did not find any big news (was not really looking), but the simple answer came right after market close.  I’ll present it to you after you’ll look at some charts.



And here is the reason for such spectacular gains (you would have to forgive me if I got that wrong – I am just one logically structured moron who tries to find some rules in unruly times before they going to start shooting)
21 Dec 2009 18:08

Moody's may cut Alcoa to junk on Saudi joint venture

NEW YORK, Dec 21 (Reuters) - Moody's Investors Service said on Monday it may cut its ratings on Alcoa <AA.N> into junk territory, after the company formed a joint venture with state-run Saudi Arabian Mining Co (Maaden) <1211.SE> to build a new aluminum complex.
The firms have yet to raise the financing for the complex, which is planned to be built in Saudi Arabia, the world's top oil exporter, and will target the Middle East from 2013. For details, see [ID:nLDE5BK0I5]
Moody's said it may cut Alcoa's ratings from Baa3, the lowest investment grade. A downgrade into junk territory can significantly increase a company's borrowing costs.
"Given our expectation for only slow recovery in the aluminum industry and in Alcoa's earnings, the potential for further delay in balance sheet improvement and debt reduction as a result of this investment is a consideration prompting the review," Moody's said in a statement.
Alcoa's equity investment will be in the $900 million range over a four-year period, Moody's said.
The review is also prompted by a slower-than-expected earnings recovery this year in spite of higher-than-expected aluminum prices, Moody's said. (Reporting by Karen Brettell; Editing by Dan Grebler) ((; +1 646 223 6274; Reuters Messaging: )) Keywords: ALCOA RATING/MOODYS
(c) Reuters Limited. Click for Restrictions.

Bingo or in the language of my generation - Halle-fucking-luiah
The Holy Grail of how to make stocks rise=”just rate them JUNK”
blog comments OCCASIONALLY powered by Disqus