Century Aluminum Gaps Lower After Q3 Report

Century Aluminum （CENX） took a dive right out of the gate Wednesday morning, as traders panned the commodity concern's third-quarter results. Tuesday night, CENX confessed to a quarterly loss of $16.8 million, or 18 cents per share, down substantially from its year-ago profit of $40.1 million, or 45 cents per share. Sales for the quarter climbed to $279.2 million, but CENX's bottom line was dented by a $12.2 million mark-to-market loss on forward contracts.

The aluminum issue managed to exceed analysts' consensus revenue forecast of $269.5 million, but the quarterly loss fell well short of Wall Street's prediction for a net profit of 8 cents per share.

CENX fell roughly 8% with the sound of the opening bell, with the shares pulling back toward support in the $12 region. This area is home to the stock's rising 10-week moving average, which hasn't been breached on a weekly closing basis since Aug. 27.

Fortunately for CENX, it seems that traders had rather low expectations heading into this report. During the past 10 days, speculators on the International Securities Exchange （ISE） bought to open 1.41 puts for every call on the shares. This ratio ranks higher than 84% of comparable readings taken during the past year, as traders have purchased bearish bets over bullish at a faster pace just 16% of the time.

In the same vein, short interest accounts for a lofty 16.5% of CENX's float. At the equity's average daily trading volume, it would take nearly four days for all of these shorted shares to be covered.

Of course, in light of Wednesday's bearish gap and the threat of chart resistance in the $15 region, it's too soon to make a bullish call on CENX. However, the relatively heavy pessimism surrounding the shares -- along with the presence of trendline support just below the stock's current perch -- suggests that additional downside could be limited during the short term.