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A mining truck loaded with rocks and minerals travels past a worker along a road at Chile's Esperanza copper mine near Calama town, about 1,650 km (1,025 miles) north of Santiago, March 30, 2011. (IVAN ALVARADO/REUTERS)
A mining truck loaded with rocks and minerals travels past a worker along a road at Chile's Esperanza copper mine near Calama town, about 1,650 km (1,025 miles) north of Santiago, March 30, 2011. (IVAN ALVARADO/REUTERS)

SCHIZAS’ MAILBAG

Bad technical signals abound for this tire maker Add to ...

Hi Lou,

I am taking a serious look at TWI. Your thoughts please.

Thanks,

Rich

Hey Rich,

Thanks for the assignment.

Titan International Inc. provides tire and wheel sets for off road use in agriculture, construction, forestry and mining. Its good that you are having a look at the stock instead of owning it. The shares failed to hold support at $16.00 and have been retesting support near $14.00.

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A study of the charts will better inform my thoughts on TWI.

The three-year chart indicates that the shares have been toiling under a downtrend since May of 2013 when they pulled back from resistance at $24.00. The stock gapped down in early June from $22.00 to $19.50 in two trading sessions. At the time the shares were downgraded by a couple of analysts. In addition it seems that the market was expressing concern that the demand for the massive tires used in the mining industry was slowing as the prices of metals declined.

As the shares retreated they broke below the 50- and the 200-day moving averages in one trading session alerting investors that there was trouble in River City! By late June a death cross surfaced as the shares retested support at $16.00. But that wasn’t the end of the pain investors had to endure. The break below support at $16.00 took the shares to a 52-week low of $14.14 on Sept. 30, 2013.

The six-month chart depicts the resistance along the 50-day moving average that has been in place since August. Every attempt to move higher has failed. The MACD and the RSI are not generating strong signals that TWI is on the verge of starting a new advance. The company is expected to report third-quarter results on or about October 23 which is the next flex point for this stock.

With an established downtrend, a death cross, and no strong signals from the momentum indicators, it would be advised to continue to track this one for a sign that buyers have taken control of the market.

Make it a profitable day and happy capitalism!

Have your own question for Lou? Send it in to lschizas@globeandmail.com.

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