Time to be bearish for Alcoa

Alcoa (AA) was one of the hottest and most chased stocks in 2014. I was interested in AA when it was below $10 but never pulled the trigger to get in. So I totally missed this trade. But I think another great opportunity to trade AA is coming but in the opposite direction. I think 2015 will turn out to be a very depressing year for AA. Fundamentally AA is facing a lot of headwind moving forward: its leading market for aluminum, China, is significantly slowing down, especially in the sectors using a lot of aluminum such as housing. You cannot expect AA continuing to profit as much as it did in 2014. But I'm more bearish with it technically. As you can see its long-term chart below, AA is hitting its 8 year trend line and turning back (the dot line). More worrisome is that it was facing a 20 year resistance line (the solid line). In the past 8 years, it has tried 3 times to challenge the resistance but just could not get over it. So technically AA can move back all the way down to the level around $10.

If you hold AA, it is the time to take your profit and get out of it ASAP. If you are more aggressive, then buying some AA put options will likely make you some money. This is what I'm going to do to not to lose the money-making opportunity!