Teck Resources (TCK) has made a stunning advance to nearly $18 a share this week from below $3 in January. While the markup has been breathtaking, this only represents a 25% retracement of the decline from its 2011 zenith around $65. With significant chart resistance above $20, traders should be prepared for a downdraft at some point soon.
In this one-year daily chart of TCK, above, we can see a steady stairstep advance for TCK. Dips toward the rising 50-day simple moving average line have been buying opportunities. A bullish golden cross of the 50-day and 200-day moving averages can be seen in early April, not too far off the bottom. The On-Balance-Volume (OBV) line has been rising with the price action from a January low and confirms the advance. Momentum has slowed from July to August to September and suggests that future near-term gains may be harder to achieve.
We needed to look at a 10-year weekly chart of TCK, above, to get a sense of the long-term decline that took prices down to the depths seen in 2008 and 2009. This long-term chart puts the 2016 rally in a different perspective -- very impressive on a daily chart but just a 25% retracement on this chart. Prices are above the rising 40-week moving average line. The weekly OBV line has improved while momentum has slowed. During 2013 and '14, TCK found buying support around $20 and this area is likely to reverse roles and become resistance in the days and weeks ahead. If TCK starts to weaken ahead of the $20 level, it will be a sign that sellers have become more aggressive.