For most of 2024, shares of Wheaton Precious Metals Corp. were ranked high on the SIA S&P/TSX Composite Index Report and outperformed other names within this index. In January 2024, the price of WPM.TO was trading just above $60, and at its highest point, it reached $94.84. However, selling pressure has since taken control of the stock, along with many other names in the precious metals sector. This relative outperformance is shown in the first table, where WPM.TO’s position rallied into the favored green zone but later drifted back into the neutral zone of the report by late 2024. Given that the SIA Metal & Mining Equal Weight Sector has also lost its relative strength as a group, it is important to review Wheaton for advisors interested in the name and sector, as there appears to be a shift in sentiment. To contextualize this shift, attached is a long-term chart of the SIA S&P/TSX Global Gold Index (EWIXGD.TO), which may explain the sudden selling pressure. Note the resistance from 2010, circled on the left, and the long tail wicks on the right. Additionally, a long-term trend line from 2008 shows current trading levels far from trend, coupled with the declining volume highlighted by the red line and the now low SIA SMAX score of 4, compared to the best possible score of 10. Combined, these indicators suggest that supply is gaining control of the sector.
With that backdrop, we now turn to shares of market favorite Wheaton Precious Metals (WPM.TO), where the point-and-figure price discovery triangle has been forming, having reached resistance at $94.56. With the SIA Matrix Position Overlay Tool engaged, it is apparent that shares have now moved into the yellow neutral zone of the SIA S&P/TSX Composite Index Report, after having flashed yellow/green for much of the year. Support is now at the $77.58 level, which aligns with the bottom of the forming triangle, with longer-term support at $70.26. Meanwhile, the SIA SMAX score has toggled red for WPM.TO, with a reading of 5 out of the best possible score of 10, and as noted earlier, the sector is now unfavored, also denoted in red text at the top of the chart. Near-term resistance will be the 3-box reversal level of $87.36, which is consistent with the top of the price discovery triangle. Advisors can expect a resolution in the near term, which may set the stage for precious metals in general and Wheaton in particular for 2025 trading.
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