Teck Resources Ltd. in a sustained downtrend

Sep 21st, 2011 – Comment

TCK.B needs an expanding global economy to stoke demand for its resources. Unfortunately economic growth forecasts are being revised lower taking this stock with it.


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Hello Lou,

 Could we have your thoughts on Teck Resources Tck.b over the next year.

Thank you.
Doug

 

 

Hi Doug,

I last undertook an analysis of  Teck Resources Ltd. (TCK.B TSX) on December 17, 2010 for Gerald. At that time there were no indications that the stock would breach its trend line but it was advised to take some money off the table and book profits. On January 12, 2011 the stock reached a 52 week high of $64.62 and then started to retreat.

A review of the charts will contribute to our understanding of where TCK.B has been and where it might be going.

 

The three year chart indicates that the shares have been in a sustained sell off since the early part of the year. What is evident is that the uptrend that took the stock from the low thirties in the summer of 2010 to the highs in mid January of 2011 was breached within days of reaching the top. A death crossed surfaced in early June of 2011 when the shares traded at $50.00. A death cross, when the 50 day moving average crosses below the 200 day moving average, is a signal that should not be ignored. Basically it confirms that selling has gripped the stock and if you hadn’t thought of bailing out earlier it would be prudent to do so immediately. 

 

 

 

 

The six month chart depicts a series of lower highs and lower lows which is never a good time to get on a ride. Another feature worth noting is that the stock has not been able to hold onto support at $50.00, $44.00, or $38.00. In addition the MACD has generated accurate buy and sell signals through the period. Currently it is indicating continued weakness.

 

Given the current down trend and the death cross on the chart if you are looking to buy now it would be prudent to wait. Eventually TCK.B will find a bottom and reverse this trend. If you own the stock the next level of support comes in at 30.00 and below that at $25.00. TCK.B needs an expanding global economy to stoke demand for its resources. Unfortunately growth forecasts are being revised lower taking this stock with it.

Make it a profitable day and happy capitalism!

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