Coal, copper, zinc, and fertilizer heavyweight Teck Resources Ltd. stock (TECK.B.TO) had been performing well until early autumn, when the stock began to decline, giving back -11.2% of its returns, leaving it with a current YTD return of +6.72%. When compared to a market rate of return of +10.42% from the SIA S&P/TSX 60 Equal Weight Index, the performance appears less favorable. It is even less attractive when compared to the top performers within the SIA S&P/TSX 60 Index Report, where returns are all in excess of 30%, with many up over 50%, such as Shopify (SHOP.TO), Manulife Financial (MFC.TO), Gildan Activewear (GIL.TO), and Kinross Gold (K.TO). This underperformance occurred late in the year, affecting many materials stocks, especially copper stocks, with Teck shares bearing much of the impact. Technically, the picture has deteriorated, as observed on the first long-term point and figure (PNF) chart. As shares declined down the SIA Relative Strength matrix, the color on the SIA overlay turned red, elevating the risk of a pullback, which ultimately materialized. That said, over the long term, TECK.B.TO is generally a favored stock in the SIA S&P/TSX 60 Index Report, with approximately a rollover each year from 2021 to 2024. This makes the stock challenging to own long term due to the relative strength reversals, making Teck Resources a tough position for SIA rules-based practitioners. As we approach the last days of 2024, shares of Teck are now perilously close to a spread double bottom breakdown at a critical support level of $57.27. Should this level fail to hold, shares could find further support at $46.06, with trend-level support near $43. In the meantime, the SIA Metals and Mining sector has turned Unfavored within the SIA sector report. Coupled with the fact that TECK.B.TO has lost its near-term relative strength compared to all other asset classes, given its SMAX score of only 1 out of the best possible score of 10, the technical outlook remains challenging.
In the second point and figure chart, we have adjusted the scope to a near-term duration of 2 years and focused the box size to 1%. This allows SIA PNF chartists to zoom in on more detailed support and resistance, where again we find TECK shares on support at $57.19, with more support below at $55.50. A break of this level sets the stage for lower support at $48.77. Here again, we can see with greater clarity the exact time in August when the shares entered the Neutral yellow zone (then Unfavored red) of the SIA S&P/TSX 60 Index Report, where SIA practitioners would have looked for higher relative strength positions, which in August would have been the plethora of SIA Financial stocks entering the matrix. Given the latest action of typically favored status TECK.B.TO within the SIA S&P/TSX 60 Index Report, it would be logical for SIA practitioners to remain mindful of any technical changes within their metals and materials holdings, as these recent rotations are certainly notable.
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