What’s your view on Teck now?
Thanks for the assignment. This will be the eighth time since 2010 that I audit the patterns found in the charts for Teck Resources Ltd.(TCK.B TSX). The last time was on September 28, 2015 for Andrzej. The shares were trading for $6.52 and he cited my earlier analysis which he deemed negative and asked why he should ignore a dividend yield of 9.8% and a cash hoard of $1.3 billion.
The research conducted indicated that there was an established downtrend, a death cross that formed in late September of 2014, resistance long the moving averages, lower highs and lower lows, all of which pointed to sellers being in control of the market. It was advised that the dividend and the cash hoard would provide little comfort in the face of capital depreciation.
There was a quick run in October to near $10.00 but by December of 2015 TCK.B was trading near $4.50.
Another inspection of the charts will provide the basis of this review.
The three-year chart depicts the bounce off the 52-week low of $3.64 in January of 2016. The move higher has taken the stock up and through the 50 and 200-day moving averages which had been introducing resistance since the summer of 2014. The MACD and the RSI both generated buy signals as TCK.B moved off the 52-week low.
The six-month chart indicates that the advance since January has been extremely generous. A 173% gain in two months has to be viewed as spectacular. Make note of the resistance that comes in near $10.00 and the overbought condition indicated by the RSI. When a stock gets overbought savvy investors usually take the opportunity to book some of their profits.
The shares are still dealing with the downtrend and we have yet to see a golden cross surface. The dividend was chopped to $0.05 in December and now generates a yield of 1.01%.
Although we have seen some impressive progress on the price of the shares I would advise constant surveillance if you are thinking of hitting the buy button. TCK.B has run hard and fast and you want to make sure the advance is sustained.
Next time I will scout Loblaw Companies Ltd. (L TSX) for Jim.
Make it a profitable day and happy capitalism!