SIA Chartsā Relative Strength rankings can help investors to identify which sectors are attracting or losing capital over time and changes in investor sentiment. Relative strength analysis can also help to identify which stocks within a group are being impacted the most or least by a change and which are outperforming or underperforming relative to their group.
This week, the Energy and Materials sectors have come under pressure as a result of selloffs in the prices of Crude Oil and Copper. On the Energy side, MEG Energy (MEG.TO) has been hit particularly hard, losing 8.3%, compared with a decline of 1.3% for the S&P/TSX Composite Index, an 8.3% drop for the price of US Crude Oil. As a result of this decline, MEG.TO has dropped out of the green zone into the Yellow Neutral Zone of the SIA S&P/TSX Composite Index Report and is currently sitting in 65th place. Its drop of 53 positions in the last month is the second worst out of the 35 Energy stocks in the index, and its 9.5% price decline over the last month is the worst of the bunch.
Candlestick Chart Shows Distribution Accelerating. Over the last two months, a bearish Falling Channel of lower highs and lower lows has emerged in MEG Energy (MEG.TO) shares, which, along with the shares falling and remaining under their 50-day moving average indicates that accumulation has shifted to distribution. This week, selling pressure has increased with the shares breaking down below $29.00 and falling through the floor of the channel on increased volume. In combination, these indicators signal that a new downleg has started.
Based on previous highs and lows, next potential downside support may appear near $26.00, $25.00, or $23.00 on trend. Initial resistance on a bounce appears at the recent breakdown point near $29.00
Point and Figure Breaks Down Again. This 1% chart shows how after a major winter rally that peaked back in April, MEG Energy (MEG.TO) shares have come under distribution. Over the last two months, a new downtrend of lower highs has emerged and the shares have completed a series of bearish Double Bottom breakdowns that have combined into a series of Bearish Catapults.
Based on a combination of vertical and horizontal counts and previous column highs and lows, next potential downside support may appear near $26.75, $25.20, or $24.70 on trend. Initial resistance on a rebound appears near $29.00 based on a 3-box reversal.
With a bearish SMAX score (which is a near-term 1 to 90-day indicator comparing an asset against different equal-weight asset classes) of 5 out of 10, BDGI is exhibiting short-term weakness across the asset classes.
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