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Amid Earnings, Buy Alcoa if It Holds This Level: Grasso


Earnings season gets underway on Monday with Alcoa reporting after the close. And ahead of the results, the Fast gang smells a trade.

Shares of the aluminum giant traded lower after Deutsche slashed estimates to $10 from $12 saying demand for industrial metals will be hurt by the European debt crisis and a slowdown in emerging markets.

Those challenges and others have put pressure on Alcoa's share price, which fell about 10% in the fourth quarter and almost 44% for the year.

However, there is a sunny side to this situation; all the selling has sent shares down to a key level -- one which may prove to be support.

“Technically the stock broke down in late August” explains trader Steve Grasso. “Now the stock has to hold $9.10 for a couple days.” But if it does, that’s significant, if it does that’s an entry point. “If it holds that’s confirmation of support and I’d jump in.”

Jon Najarian sees opportunity too. “I’m not in it – but their major input cost is nat gas and that's been weak. I also think Alcoa is getting interesting.”

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Trader disclosure: On Jan 6, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Terranova owns APC; Terranova owns OXY; Terranova owns XOM; Terranova owns VRTS; Terranova owns IBM; Terranova owns CSCO; Terranova owns AXP; Terranova owns SBUX; Terranova owns CSX; Terranova owns SWN; Terranova owns AXP; J. Najarian owns AAPL; J. Najarian owns AKS; J. Najarian owns BAC; J. Najarian owns PNC; J. Najarian owns GS; J. Najarian owns NFLX; J. Najarian owns MSFT; J. Najarian owns AA; P. Najarian is long AAPL; P. Najarian is long C; P. Najarian is long JPM calls; P. Najarian is long WFC calls; P. Najarian is long NFLX calls; P. Najarian is long MSFT ; P. Najarian is long INTC; P. Najarian is long YHOO; P. Najarian is long INTC; Weiss is long EUO; Weiss is short FXA; Grasso owns ASTM; Grasso owns AVAV; Grasso owns BA; Grasso owns D; Grasso owns LIT; Grasso owns MHY; Grasso owns PFE; Grasso owns PRST; Grasso owns S; Grasso owns XLU; Weiss is long EUO; Weiss is short FXA

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