SIA Charts’ relative strength rankings help investors manage risk by identifying stocks and sectors which are underperforming relative to their peers and/or their benchmarks and should potentially be avoided. Staying away from stocks that are not attracting capital can help investors to avoid areas at higher risk of absolute declines and relative underperformance. BCE Inc. (BCE.TO) has been a perennial relative cellar dweller within the Canadian equity universe. The shares have been stuck in the Red Unfavored Zone since July of 2022, and they have been outside of the green zone since April of 2020. Currently BCE.TO is at rock bottom of the SIA S&P/TSX 60 Index Report, and fourth from the bottom in the SIA S&P/TSX Composite Index Report. BCE.TO may be considered an example of a so-called “value trap”. Although the shares currently have a 9.0% dividend yield, capital losses on the shares year-to-date are close to 18.8%. In contrast, the S&P/TSX Composite Index is up 3.3% so far in 2024. BCE (BCE.TO) shares have been under distribution since April of 2022, as shown by the Falling Channel of lower highs and lower lows. Selling pressure against the shares has increased in recent weeks with the shares accelerating downward on increased volumes (circled). The shares are approaching potential support at previous lows near $43.00, followed by the $40.00 round number on trend. Initial resistance appears at the 10-week moving average near $47.00.
The latest rebound attempt in BCE (BCE.TO) shares ran out of gas back in February just short of $55.00 and since then, distribution has resumed. In recent weeks, the shares have consistently declined without even so much as a 3-box bounce. In recent weeks, the shares have completed bearish Double Bottom and Spread Double Bottom breakdowns and dropped back under $50.00, all combining to signal that the long-term downtrend remains intact. A vertical count suggests next potential downside support may appear near $42.40, followed by the $40.00 round number and previous column lows near $38.80. Initial resistance on a bounce appears near $46.40 based on a 3-box reversal. With a dismal bearish SMAX score (which is a near-term 1 to 90-day indicator comparing an asset against different equal-weight asset classes) of 0 out of 10, BCE.TO is exhibiting short-term weakness across the asset classes.
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