In an example of how markets go up like an escalator and down like an elevator, auto parts producer Linamar Corp. (LNR.TO) has completed a round trip within the SIA S&P/TSX Composite Index Report. Linamar left the Red Zone back in June and steadily climbed up the rankings over the summer, briefly returning to the green zone last week before plunging back down the rankings and returning to the Red Unfavored Zone on Friday. Linamar is currently in 120th place, down 42 positions in the last month.
A major breakdown is underway in Linamar Corp. (LNR.TO) shares. It’s amazing sometimes how fast the wheels can fall off a bandwagon. After steadily climbing from May to September, LNR.TO was contained by resistance near $65.00. Following a second failed breakout attempt, the shares have turned downward, snapping a support line, breaking below their 50-day moving average and plunging into the low $50s on a spike in volume, indicating a sharp increase in selling pressure.
Next potential support tests appear near the $50.00 round number, then a previous low near $45.00. Initial resistance on a bounce could emerge in the $58.00 to $60.00 area.
After selling off last winter, Linamar Corp (LNR.TO) shares bounced back over the summer. Last month, however, they stalled at a lower high near $67.20 and recently have turned decisively back downward, completing a bearish Double Bottom pattern that has extended into a bearish Low Pole.
Next potential downside support appears at a previous column low near the $50.00 round number, followed by the $46.00 to $48.00 zone where a previous low, horizontal count and 45-degree uptrend line cluster. Initial rebound resistance appears near $58.50 based on a 3-box reversal and a previous breakout point.
With a bearish SMAX score of 4, down from 9 two weeks ago, LNR.TO is exhibiting weakness against the asset classes.
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