Teck Resources Ltd. (B) (TECK.B.TO)

You had a couple of negative technical indicators the last couple of weeks. It has formed a slight downward trend, breaking the former upward trend. Coal broke down on Friday. Seasonally this stock does well from the end of January. Take some money off the table until then.

This had a real decline going back to 2011. Two thirds of their EBITDA comes from metallurgical coal. Met coal prices for the upcoming year have settled at about 40% higher than they were mid-2016. Chinese steel production is picking up. There is better global growth in many areas of the world. This one is a big winner as met coal prices go higher. Feels there is more room to go.

There has been a little softness in met coal recently. Seasonally, the metals and mining sector tend to do well from October 28 into the end of the year. It then tends to have a 2^nd run from January into May. Although it has had an incredible run of 500% from its lows, it is still in its upward trend. He would wait for a couple of days for it to turn around and start to pick up.

There is evidence that met-coal prices came off a bit in China. His volatility stop got hit last week. Around $30 you could buy on weakness. Don’t take your full position right now. It will probably run sometime during December as well as in a month or two.

This has done very well recently, primarily on the strength of coking coal, which is based on manufacturing steel, and to a lesser extent copper and zinc. If infrastructure comes into play, it will be positive for all base metal commodities. The issue in the short term is whether the recent run-up has gone too far. What this rally does is to improve their balance sheet. If you want to stay in the resource sector, this is a good place to be.

This came out of his “blue” level back in July and August. He has owned this since $17. Earnings are racing ahead on this. He has a model price of $77.18, a 124% upside.

Coal, zinc and Copper are the main commodities. It is still in an upward trend, trading above the 20 day moving average, momentum indicators are above average and it is outperforming the market. It does well until the end of April, seasonally.

This has taken off like a rocket, mainly because of the huge run up in coal prices which he thinks is unsustainable. It all has to do with the Chinese doing this thing and the other thing. You can’t really base your investment strategy on what the Chinese are going to do next week or next month. Feels this is significantly overpriced, and represents a real risk to its holders.

This is a very popular stock in Canada. For several years, he has said avoid, avoid, avoid. China is slowing copper. Now the stock has gone absolutely insane. It’s a momentum play right now, and it terrifies him to no end to try and buy this. He would avoid. If you are going to be in it, you must use really tight stops. This is a momentum play behind the “infrastructure spend”, and he is just not sure it is going to materialize.

A year or 2 ago, he recommended shorting this with China slowing down and their huge debt load. Then he recommended going Long on it. Right now, he would not be short this, you want to be Long, because it is getting its balance sheet in shape and has improved its financial division dramatically. As well, copper and coal have had nice runs. Feels there is still significant upside to go.

Materials tend to do well from about November all the way through to April, and we are in a period of strength. This has a varied history, especially given the volatility of the past 2 years, but December itself can be very positive for them. There have been gains 75% of the time. It has had a phenomenal run over the past year, and is stretched, along with everything else. You want to buy this on a retracement level back to support. The 20-day moving average is at $30.90, and has acted effectively as support throughout this run. Then the 50-day comes in at $27.36, which would be the lower limit of that range. You are risking a lot of money at this point.

Coking coal it appears is being held back in the Chinese markets. As a result, prices are going higher. It is certainly helped by the fact that there is a friendlier regulatory environment in the US, and that the steel industry appears to be heading higher. If we are going to get fiscal stimulus in the US on an infrastructure spend, there is going to be demand.

It has had a really big run-up. Metals have started showing their head above water. TCK.B-T is one of those companies where the prices were really under pressure and they had a really big debt load. It comes down now to how things play out with their commodities.

The move in met coal, which seemed like the most unloved commodity, just seem to be right out of whack with reality. There has been such a squeeze in the met coal market, and it is going to pull back. Met coal will be back to $125-$150 a ton, at best. It may take a year to do it. Luckily for this company, they can use this windfall by taking all of that cash and solving their biggest problem of outstanding debt.

Up and to the right. It was a bad story and now it is a good story. He loves this chart. But short term it is overbought and it would make it an entry point if it pulled back.