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What are we looking at?

Positive trending Canadian stocks.

The screen

We limited our pool to the S&P/TSX 60 index.

To find the most positive, we looked at each stock's 40-week moving average (40wMA). This is the average closing price for the stock over the last 40 weeks. Charting the moving average week-by-week gives us a sense of investors' behaviour: Are they growing more (or less) enthusiastic about the company's outlook, and are they more (or less) likely to purchase the stock? Generally speaking, stocks that trade above their rising 40wMAs are the best candidates for investments; they are the ones that show a bullish pattern. We included only the stocks with a rising average in the adjoining table.

We chose this indicator because stocks tend to stay relatively close to their 40wMAs. When stocks rise far above this average, investors often use this as an opportunity for profit taking, since this usually leads to a price correction toward the 40wMA. Similarly, when stocks decline far below this average, investors can usually expect a recovery rally to follow toward the average, providing a selling opportunity.

More about Phases & Cycles

Phases & Cycles Inc. has been providing independent research for over 25 years, using behaviour analysis. It publishes investment ideas for both the Canadian and U.S. equity markets. Its research reaches more than 1,000 users across North America and Europe.

What did we find?

There are currently only seven stocks in the S&P/TSX 60 index that are trading above their rising 40wMAs. Despite the recent market weakness, these stocks remain positive, as they continue to trade above their rising 40wMAs.

Recent price action on Agnico Eagle Mines is positive; there is good support near about $36. Alimentation Couche-Tard has been in a long-term up-trend since 2012 and has good support at $55-$56. BCE Inc. recently completed a minor correction and now appears ready to resume its up-trend; a sustained rise above $57-$58 would confirm this. CGI Group is currently in the midst of a minor correction toward its average and should remain above $51-$52 to stay positive.

Following about four months of negative price action in mid-2015, Franco-Nevada is once again trading above its rising average to signal a positive trend; a rise above $72-$73 would signal higher targets. Metro has been in an uptrend since 2014; it is somewhat overbought and could pull back toward about $37, but only a decline below about $36 would be negative. Rogers Communications recently pulled back to its rising 40wMA and appears ready to resume the long-term uptrend; a sustained rise above $50-$51 would signal this.

Readers should consult a professional before making investment decisions.

A larger list covering the stocks on the S&P/TSX composite, is available at info@phases-cycles.com.

Ron Meisels is the president and Monica Rizk is the senior technical analyst for Phases & Cycles Inc. (www.phases-cycles.com). They may hold shares in companies profiled.

Positive-trending Canadian stocks