At SIACharts, we compare head-to-head battles of thousands of stocks, commodities, mutual funds, and exchange-traded funds daily and rank them by relative strength based on who is winning the most in their respective universes. The top 25% of investments are in the Green Favored Zone, 26-50% make up the Yellow Neutral Zone, and the bottom half of each investment report is considered the Red Unfavored Zone. Back in the spring of this year, we reported on energy producer Cenovus Energy (CVE.TO) as it marched its way back up the relative strength rankings in the SIA S&P/TSX 60 Index Report. CVE.TO had just cleared the $29.00 hurdle for the first time since 2022 and was closing in on the $30.00 round number to confirm a massive breakout with resistance dating back to 2010. As we enter fall, we can see that Cenovus did not have the power to break through long-term resistance and fell back into its trading range. Shares of CVE.TO also fell down the relative strength matrix, now firmly camped out in the Unfavored Red Zone of the SIA S&P/TSX 60 Index Matrix Report at position #44. Recent trading in the $26 level shows CVE.TO near the top of the trading range that is in place between $19 and $29. Volume is also light on this low relative strength energy name as the chartists observe a shooting star on the weekly candlestick chart. A shooting star candlestick pattern is a bearish reversal signal characterized by a small body at the lower end of the price range, a long upper shadow, and little to no lower shadow, indicating a potential reversal from an uptrend to a downtrend.
The attached Point and Figure Chart is very large, and the numbers can be a challenge to read, so let us detail them here. The point of the exercise is to observe the actual support and resistance lines that date back to 2010. Top-line resistance is now to the penny, with the top line at $29.55, which will serve as the most important number to keep in mind. A break above this level would indicate the continuation of the Cenovus Growth story, and SIA practitioners could automate this by adding an alert to their platform to know when the game is back on. Other resistance levels appear at $28.79 and $28.23. Also note the price discovery triangle that is being established on the chart, with breakouts in either direction being important dates for practitioners. To the downside, the level of $24.57 would confirm a bearish triangle, with support then at $19.76, $19.00, and $17.55. With its Bearish SMAX score (which is a near-term 1 to 90-day indicator comparing an asset against different equal-weight asset classes) of 4 out of 10, CVE.TO is exhibiting minimal short-term strength against the asset classes.
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