In the wake of a disappointing quarterly report, which included an earnings miss, cuts to production guidance and news of more cost overruns at a key mine construction project, Teck Resources (TECK.B.TO) shares fell 8.9% yesterday. This selloff knocked the stock down 2 positions in the SIA S&P/TSX 60 Index Report and back down into the Yellow Neutral Zone.
Two other miners remain in the Green Favored Zone of the SIA S&P/TSX 60 Index Report including Cameco (CCO.TO), and Kinross Gold (K.TO – SMAX 10), along with several senior energy producers. Following what appeared at the time to be a spring correction, Teck Resources (TECK.B.TO) shares settled into a summer of sideways consolidation in a channel between $50.00 and $60.00. Following a failure to break through the top last month, the shares started into a downswing with a series of lower highs suggesting increasing distribution.
Yesterday, TECK.B.TO decisively broke down starting with a breakaway gap to the downside and finishing below $50.00 former round number channel support, which may now reverse polarity to become initial resistance along with $52.00. Next potential downside support tests appear at a previous low near $45.00, then $40.00 where a measured move, round number and previous low cluster.
Teck Resources (TECK.B.TO) shares have staged a decisive downturn this month. After peaking back in April, Teck spent the summer consolidating previous gains as shown by the formation of a Symmetrical Triangle of higher lows and lower highs. This month, however, the bottom has fallen out from under TECK.B.TO. In recent days, the shares have snapped two uptrend support lines and completed bearish Double Bottom and Spread Double Bottom breakdowns that have extended into a low pole and sent the shares below $50.00 to their lowest level since March.
Next potential downside support appears between $40.00 and $41.65 where a round number, horizontal count and previous column highs/lows cluster, followed by $37.70 which is based on a vertical count. Initial resistance appears near $52.80 based on a 3-box reversal.
With a bearish SMAX score of 5, TECK.B.TO is exhibiting weakness against the asset classes.
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