Why This Coal Stock Could Be Ready to Rally

TECK's chart appears very bullish

Sep 11, 2017 at 2:25 PM
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Coal stock Teck Resources Ltd (USA) (NYSE:TECK) has been hot since bottoming at $14.56 in mid-June, topping out at $25.67 back on Sept. 1. The shares have pulled back slightly since then, last seen trading at $23.52, but data suggests they could be due for a bounce. Schaeffer's Senior Quantitative Analyst Rocky White notes that TECK stock has pulled back to within one standard deviation of its 40-day moving average, a trendline that historically has had extremely bullish implications. 

teck stock

Specifically, the security has pulled back to this moving average six times over the past three years, and each time it's been higher a month later. In fact, it's averaged a mind-bending gain of 25.6% after such occasions. And just below this key technical level is a 61.8% Fibonacci retracement of TECK's 2016 high to its 2017 low. 

Analysts are certainly remaining upbeat. Of the 14 brokerages covering Teck Resources, 11 have given out "strong buy" ratings. However, another strong bounce off its 40-day trendline could encourage the three remaining holdouts to upwardly revise their ratings.

Options traders seem bullish, too. TECK has a 10-day call/put volume ratio of 2.73 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), meaning call buying has nearly tripled put buying over the past two weeks. However, volume has been light on an absolute basis. 

 

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