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Teck's Highland Valley mine, near Kamloops, B.C.
Teck's Highland Valley mine, near Kamloops, B.C.

Schizas' Mailbag

Teck's advance has stalled Add to ...

What is your outlook for Teck Resources? I am down 20% and uncertain if I should continue to hold. I thought the demand for coal would boost this stock higher going forward.


Hi Pat

Teck Resources Ltd. has had a great recovery from the March 2009 lows but the advance has taken a breather and the question is, can it get back on the rails and make its way to new highs?

The three year chart provides a view of the resistance at $50 that has been in play for the past 10 years. When I see that a stock has not been able to make its way through a barrier for an extended period of time, it's a call to watch for a pullback. Which is where we find ourselves at this particular time. You can also see that there is support at $30 where TCK caught a bounce.

The six month chart provides a closeup of the recent action in the stock and the resistance it is now facing along the the 200 day moving average. TCK has a bit of work to do if it is going to move through $35 and then again through $40, where there is another barrier to a further advance.

In reporting its first quarter results in April TCK said that their results didn't reflect the increased price for metallurgical coal that they had negotiated and that they would pay down the remaining debt associated with their purchase of Fording Coal in 2008.

As positive as the news was there was no corresponding sustained enthusiasm in the trading value of the stock, suggesting that great fundamentals may not translate into higher prices for the shares. With TCK trading below its 50 and 200 day moving averages and significant resistance on a long term basis at $50, I think the best way to approach it is by trading. There is support at $30 and you could catch a bounce to $35 again. As far as a buy and a hold I think we are done with that for now.

Happy Capitalism!

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