On the weekend, our family went on a long drive through some of the most beautiful places on earth. Starting near the headwaters of the Columbia River system in British Columbia, we wound through Lake Louise, turned north through the Icefields Parkway and headed to Jasper, AB. From there, we went on to Grande Cache and Grande Prairie outside the mountain ranges. We stayed at a farm for 2 days and then rolled through Fox Creek, Whitecourt, Mayerthorpe, Edmonton, Red Deer and ultimately parked in Calgary.
This area encompasses a brief insight to some Western Canadian resources. From waterways, railways, highways, and parkways, the economic engine is hard at work. I want to roll through some of the publicly traded industries that we drove past and check out the chart health of the various sectors.
Today I'll start with Transportation and move along through forestry, mining, oil and gas, oil and gas services, pipelines, equipment sales, agriculture in future articles.
The CP Rail (CP.TO, CP) main line goes through the City of Golden, BC. This is a critical line for Canadians as it moves imports into Canada and a lot of the natural resources we sell to the coast. I have drawn a red trend line that reflects the trend over the last two years rather than using the April extreme high. The red trend is broken and the price is above the 40 WMA. With a much higher low on the MACD on the recent low, this looks to be setting up to break out topside. The SCTR is still weak. Here is a link to CP Rails Map. (long load time).
CN Rail (CNR.TO, CNR) is the other railway in Canada. We only have two railways and both of these are terminating in Vancouver, but the CN Rail mainline goes through Edmonton rather than Calgary where CP Rail goes. This chart did not create an obvious downtrend like CP did over the last 18 months but it did move from an uptrend to a weaker sideways movement. This week it is trying to stay above the 40 WMA which has a slight upslope on it. The MACD is almost in positive territory and looks like it will cross the signal line this week or next if the uptrend can continue. The SCTR remains weak at this point in time. Here is the CN Network Map link.
The trucking industry in Canada is primarily a private world but there are a few publicly traded companies. Mullen Group (MTL.TO) peaked the same week as the oilpatch did. They have a few specific heavy haul divisions in Oil and Gas Services. They are also one of Canada's largest truckload carriers servicing North America. I was excited to see some rig moving on the highways and Mullen moves freight under so many different names, they have a large presence. Today they are trying to break above this downward trend line. The price is currently above both moving averages.
The other large coast-to-coast publicly traded trucking company is Transforce Inc. (TFI.TO). This chart looks stronger than Mullen as they do not have an oilpatch presence and have a larger freight contingent in Eastern Canada. The chart has bounced nicely off the 40 WMA.
Trimac recently delisted so that is unfortunate as a part of this review.
We have 2 airlines working this part of the country primarily. Westjet (WJA.TO) and Air Canada (AC.TO). Westjet bounced off the 40 WMA and is breaking through the 10 WMA this week. There was no selling acceleration on the recent pullback so that's a good sign. The MACD has gone positive and the SCTR ranking is higher on this chart than any of the others above. What makes that the most interesting is the US airlines index has been hard hit. Westjet seems to be outperforming peers and the rest of Canada's transportation industry at this time.
Air Canada (AC.TO) has been flying too by rising 50% off the lows. The airline continues to launch new routes and upgrade old routes with the Boeing 787 Dreamliner. Air Canada has broken above the 40 WMA as shown on the legend and is trying to break through the downtrend now.
As of today, every chart is back above the 40 WMA. Having the three different transportation groups back above the 40 WMA is bullish and probably the first time in 18 months. There are a lot of rail cars waiting for grain and these were spread out around the sidings. With harvest starting in August, we'll continue to monitor the uptake. The grain crops are stunningly good as long as the hail stays away. The tracks were filled with crude oil cars at the peak in 2014 and now the rail companies probably have more room to accommodate grain transportation. This should help the agriculture industry move product to the ports.
I'll continue the review of these different sectors later on in the week. I'll also cover this off on the webinars over the next few weeks. The Canadian Technician Webinar 2016-07-12 is the next one, so I hope you can join me. Click on the link to register. If not, you can check the webinar archives found here. StockCharts Webinar archives. You can also follow me on twitter @Schnellinvestor and LinkedIn. If you would like to receive the rest of this series in your email, please click on the subscribe button below.
Good trading,
Greg Schnell, CMT, MFTA.
