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The S&P/TSX Composite climbed a strong 1.4 per cent for the trading week ending with Thursday's close. Technically speaking, the benchmark is still in neutral territory with a Relative Strength Index (RSI) reading of 61.4, but it's much closer to the overbought RSI sell target of 70 than the oversold buy signal of 30.

The equity market's climb over the past two weeks have left only two benchmark constituents trading in official oversold territory with an RSI under 30 – Gildan Activewear Inc. and Kirkland Lake Gold Inc. Neither however are very interesting as trading or investing opportunities because the prices are well below their respective 200-day moving averages, indicating a downtrend when RSI buy signals are less likely to be effective entry points.

I picked the S&P/TSX Energy Index as the focus chart this week because it's bumping up against overbought, technically vulnerable levels. The index's RSI reading of 69 is only one point lower than the 70 sell signal.

RSI has worked well in identifying profitable entry points for the energy sector for long periods of time but has been less effective during prolonged sell-offs. On Dec.15, 2014, for instance, a buy signal was followed by a 22-per-cent rally to April 20 (although there was considerable volatility for the period). An RSI buy signal in June 2015 didn't work at all – the index headed lower - but another in August kicked of an 18-per-cent rally to Oct. 8.

It's the history of sell signals we're more concerned with as the energy index approaches overbought levels.

Over the past 24 months, RSI sell signals have effectively predicted sell-offs when the energy index was below the 200-day moving average – April 2015 is the best example – but have not indicated danger once the index climbed above the 200-day trendline. A sell signal in June 2016, for instance, was followed by a mere pause in the index rally before it resumed heading higher.

The only conclusion we can draw here is that holders of energy stocks needn't panic about the index approaching overbought levels until the index falls below the 200 day moving average. This is, of course, only a technical view and investors should always complete fundamental research before making any market transactions.

There are only nine S&P/TSX Composite stocks trading with RSI scores indicating overbought, technically vulnerable levels. Mullen Group Ltd. is the most overbought stock in the benchmark followed by Prairiesky Royalty Ltd., Methanex Corp., Air Canada and Ensign Energy Services Inc.

Follow Scott Barlow on Twitter @SBarlow_ROB.

This week's TSX overbought and oversold stocks

RSIPrice200DMAReturn 1W %Return YTD %PE Ratio TTMPE Ratio Fwd
GIL-TGildan Activewear Inc.28.8410634.6437.64775-3.77778-11.2221517.4486341815.34132227
KLG-TKirkland Lake Gold Inc.28.85128.039.437754.28571365.9090920.128087169.391812865
RSIPrice200DMAReturn 1W %Return YTD %PE Ratio TTMPE Ratio Fwd
MTL-TMullen Group Ltd.80.3646718.2314.90968.83581834.3758331.9654631725.56802244
PSK-TPrairieSky Royalty Ltd.79.4734330.0424.374555.44050940.89101236.5633808114.2205323
MX-TMethanex Corp.78.7652451.5340.555956.26932815.76594338.654237228.6205713
AC-TAir Canada78.5799712.99.057352.29976226.346725.5946504813.647158609
ESI-TEnsign Energy Services Inc.76.1235396.957757.65550728.44036#N/A N/A#N/A N/A
SU-TSuncor Energy Inc.74.4292838.7734.85343.13913311.28859#N/A N/A50.81258191
RY-TRoyal Bank of Canada74.0419383.9376.65391.59786916.852512.3611488411.95584046
WTE-TWestshore Terminals Investment Corp.71.3517626.4918.014654.332416133.159213.4331308816.5046729
KEL-TKelt Exploration Ltd.70.639316.834.492158.58505561.0849#N/A N/A#N/A N/A
TD-TToronto-Dominion Bank70.2864659.3755.58341.95775313.820212.7357708111.82198327
PPL-TPembina Pipeline Corp.69.4972541.9136.603153.71195244.5418835.0911271229.89300999

Source: Bloomberg/Scott Barlow