The US Economy And Outlook Based On Stock Market Earnings Reports

On Monday, April 11, Alcoa Inc. (NYSE: AA) the aluminum producer started out the first quarter reporting with excellent results:

- A first quarter profit of $308 million, or $0.27 per share, from a loss of $201 million, or $0.20 per share, in the year-ago period.

- Income from continuing operations attributable to Alcoa, as adjusted, for the first quarter was $317 million or $0.28 per share.

- Revenue rose 20% to $5.96 billion from $4.89 billion.

- Analysts, on average, expected the company to report earnings of $0.27 per share on revenue of $6.32 billion.

"It was an excellent first quarter as we improved profitability across all business segments, set profit records in our midstream and downstream businesses and grew substantially," said Alcoa Chairman and CEO Klaus Kleinfeld.

The outlook Alcoa painted for 2011 and beyond remains very positive due to the world's growing population, increasing urbanization, and aluminum's advantages as a light, strong and recyclable material.

What was the reaction of the stock market?

We write this article on purpose prior to the market opening and can say: the market dropped 0.6% in value, measured by the S&P Futures.

Stock market futures are traded basically around the clock and the international markets and those participating, let the price drop rather than buying into it, which would result in higher prices.

We use as a key measure the S&P 500 Emini Futures Contract and postulate: If the overnight price of this futures contract drops by 0.6% the stock market in average will start 0.6% lower into the day.

The S&P 500 as an index represent the 500 biggest US-Shareholder-Companies based on market capitalization.

What is our trading tactic based on this:

- Short term we are rather trade to the downside if we break below a neuralgic price level of 1308 for the S&P Emini contract.

- Long term we are in cash, waiting to get long on a clear signal for a market turn around based on assumed high earnings reports.

What does this mean for the overall economy?

“We see clear signs of recovery and look into a stronger economy for 2011”

If you want to participate in our ongoing market reports and interpretations and take advantage of your knowledge as a financial market investor: contact@NeverLossTrading.com.