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Congratulations Spain and Paul the Octopus!

Congratulations Spain for winning the Soccer World Cup first time and becoming 8th nation to join exclusive club of world cup winners. Congratulations Paul the Octopus for correctly predicting all results of all Germany matches and outcome of semi-finals and final. It's really amazing to see 100% record on predictions. In all, it was a great world cup and I enjoyed watching these matches with friends (even though India was not playing and US was out before quarter-finals). I was rooting for Spain for two reasons - they were really playing excellent and other reason is Spain as country needed this win to boost their confidence and along with it's confidence. Spanish economy which is 3rd biggest in Europe is important for European as well as World economy !

Now that world cup is over, I am looking forward to earnings season which should start from tomorrow with Alcoa announcing earnings on Monday after market close. Markets are at crucial juncture and looking for direction. It has come down nearly 10% from its high in Apr 2010 and up by 5% from its low reached last week. There are conflicting reports about double-dip or growth. That's why this earnings season and especially forecasts would be very important. I need to do some study about co-relation between "post-earning market reaction to Alcoa stock price" and "market direction for quarter". I have a gut-feel that they have direct co-relation. As does Alcoa stock price goes after earnings, so does the market. I don't have statistical model to prove it (yet!) but here is my "gut-feel" reasoning: Alcoa is biggest aluminum producer in world, aluminum is industrial commodity and has co-relation with growth prospects of world economy, stock market depends on growth prospects of economy. Hence when market reaction to Alcoa stock price after earnings could potentially signal how markets are going to go for next few weeks. Let's see what happens on Tuesday after Alcoa earnings ! For now, I am recommending Alcoa (AA) at $10.50 to $10.75 for potential gain of over 20-30% in next 12 months.

Have a great week ahead !

/Shyam

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