In the Daily Stock Report, we often reveal stocks which are deteriorating in relative strength because their own technical picture and outlooks have weakened. Sometimes, however, a company's relative strength falls due to sector consolidation or being overtaken by the strength in other sectors, which competes for those capital flows. This might be the case with the engineering sector and its darling constituent WSP Global (WSP.TO) which both started the year off very strong, but have recently slid down in relative strength rankings at a time that other sectors have started to rally, mainly miners.
WSP Global spent over a year in the green zone of the SIA S&P/TSX 60 Index Report, during which time it returned 18.5% compared with a 9.1% gain for the S&P/TSX Composite Index. In the last month, WSP.TO has slipped -2.0%, while the index has gained +1.8%.
Last week, WSP.TO slipped down into the Yellow Neutral Zone of the SIA S&P/TSX 60 Index Report and it is currently sitting in 17th position, down 3 places in the last month.
Candlestick Chart Shows Signs of Slowing. Throughout most of 2022 and 2023, WSP Global (WSP.TO) shares steadily advanced in a rising channel of higher highs and higher lows. Earlier this year, accumulation in the shares accelerated driving them through the top of the channel, but recent trading suggests a correction has started that may be returning them back to their longer term trend.
Since peaking in late March near $230.00, WSP.TO has been backsliding, dropping back under its 10-week moving average and establishing a lower high near $220.00. So far this appears to be a normal consolidation, but a bearish descending triangle has been forming.
Should the triangle complete with a close below $205.00 it would suggest a deeper correction may be starting with next potential support near the $200.00 round number then longer-term trend support near $192.50. Initial upside resistance on a rebound appears at the 10-week average near $213.40, then $220.00.
Point and Figure Starts to Break Down. WSP Global (WSP.TO) started the year off strong, with a big rally from approximately $180.00 up toward $230.00. Since peaking in April, however, the shares have been steadily dropping back down. Last week, WSP.TO completed a bearish Double Bottom pattern, signaling the start of a new downswing.
There are several downside support levels for what so far appears to be a correction within an uptrend. A 50% retracement of the recent high pole suggests initial support may appear near $202.40, followed by the $200.00 round number, a previous breakout point near $194.50 and an uptrend line near $188.80. Initial resistance on a bounce appears near $214.85 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, WSP.TO is exhibiting short-term weakness against the asset classes.
Disclaimer: SIACharts Inc. specifically represents that it does not give investment advice or advocate the purchase or sale of any security or investment whatsoever. This information has been prepared without regard to any particular investors investment objectives, financial situation, and needs. None of the information contained in this document constitutes an offer to sell or the solicitation of an offer to buy any security or other investment or an offer to provide investment services of any kind. As such, advisors and their clients should not act on any recommendation (express or implied) or information in this report without obtaining specific advice in relation to their accounts and should not rely on information herein as the primary basis for their investment decisions. Information contained herein is based on data obtained from recognized statistical services, issuer reports or communications, or other sources, believed to be reliable. SIACharts Inc. nor its third party content providers make any representations or warranties or take any responsibility as to the accuracy or completeness of any recommendation or information contained herein and shall not be liable for any errors, inaccuracies or delays in content, or for any actions taken in reliance thereon. Any statements nonfactual in nature constitute only current opinions, which are subject to change without notice.
