West Fraser Timber (WFT.TO listed on the Toronto Exchange) did not break out to the upside Wednesday such as Louisiana Pacific Corp. (LPX) , Weyerhaeuser Co. (WY) and Deltic Timber (DEL) , but it has been in a long and strong uptrend. Readers of Kamich's Korner may be wondering why review a company listed in Toronto? Two reasons come to mind. First, is I have heard from readers north of the border and the second is to illustrate that this lumber rally extends across our border. For example, when you see a rally in steel stocks that is happening in several countries it means you are looking at a strong macro move. The same thing goes for lumber companies, in my opinion.
In this daily chart of WFT.TO, below, you can see that prices have been rallying the past 12 months. Prices are currently above the rising 50-day moving average line and the rising 200-day line. The daily On-Balance-Volume (OBV) line has been rising along with the price action, telling us that buyers of West Fraser have been more aggressive than sellers. The Moving Average Convergence Divergence (MACD) oscillator, in the lower panel, is in a bullish configuration.
In this weekly bar chart of WFT, below, we can see a saucer or rounded bottom formation from 2015 into early 2017. Prices are above the rising 40-week moving average line. The weekly OBV line has been going up the past two years and clearly tells us that some long-term accumulation has been under way. The MACD oscillator is crossing to the upside for a fresh go long signal.
In this Point and Figure chart of WFT, below, we can see a price target of $110.00 being projected.
Bottom line: If you can execute a trade on the Toronto Exchange, I would go long WFT.TO around $85 risking a close below $80 looking for gains to the $110 area.