SIA Weekly: What's Happened to Lumber and Lumber Stocks Since Tariffs?

SIA Weekly: What's Happened to Lumber and Lumber Stocks Since Tariffs?

- in Canadian Market, Insight, Markets, Outlook, Stocks



Let’s take a look at the chart of West Fraser as an example. West Fraser Timber can be found in the SIA S&P/TSX Composite Index Report and currently occupies the #5 spot. The stock had entered the favored zone of the report back on Feb 23, 2017 at $54.76. As of Oct 3rd, the price was $72.48. This is a total return of 32.4% in a little over 7 months. Many investors may have exited the position last spring thinking the fundamentals of the industry may have been damaged by the implementation of the increased tariffs. SIA’s Relative Strength analysis aims to follow money flow dynamics and during this time period the relative strength had not detected any money outflows during this time as the shares had remained firmly in the favored zone of the SIA S&P/TSX Composite Index report.

This is an excellent example of a bullish signal that could have been made upon entering the favored zone and using SIA’s Relative Strength analysis to keep you in winning positions while also maintaining a unbiased viewpoint regardless of the perceived fundamental backdrop that may have been associated with the sector.

In looking at the attached chart, support for WFT.TO can be found at $66.40 and, below that, $61.34. Resistance can be found at $77.79. If it manages to break above this resistance level, the stock will have made a new all-time high with the next area of resistance at approximately the $85.00 area. With an SMAX of 10 out of 10, WFT.TO is showing near term strength against all asset classes.

 

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