Ron Meisels is director of research and Monica Rizk is the senior technical analyst for Phases & Cycles Inc. (www.phases-cycles.com).
What are we looking for?
In today’s screen we look for stocks that have long-term upside potential. We will look at four technical indicators to select the ones that meet this objective.
We limited our pool to the S&P/TSX Top 60 constituents and initially selected only those above their rising 40-week moving averages (40wMAs) since this is the primary tool of technical analysis. We then examined each stock and selected those that are above their 10-week moving averages (10wMAs), have positive moving average convergence-divergence (MCAD) and on balance volume (OBV) indicators.
A moving average is calculated by adding the closing price of the security for a number of time periods and then dividing this total by the same number of time periods. The beginning of an uptrend is signalled when the rising short-term average (10wMA) crosses above the longer-term average (40wMA).
The MACD is a trend-following momentum indicator that shows the relationship between these two moving averages.
OBV is used to detect momentum, as it relates volume to price change. OBV shows whether volume is keeping pace with the rise or decline of the selected security.
What did we find?
We found 22 stocks that are trading above both their 40wMAs and 10wMAs but only 12 that have a positive MACD and OBV. Most of these stocks are in the financial or consumer discretionary sectors. In the adjoining table we summarize our findings.
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Companies & investments Mentioned In This Article (22)
SJR.B-T 27.40 -1.968 % 420,166 Royal Bank of Canada
RY-T 78.39 0.064 % 1,073,090 Gildan Activewear
GIL-T 62.91 0.608 % 115,778 George Weston
WN-T 78.04 -0.383 % 21,752 Canadian Tire Corporation
CTC.A-T 102.04 -0.352 % 75,073 Catamaran Corp.
CCT-T 47.68 3.54 % 232,464 Metro Inc.
MRU-T 65.55 -0.712 % 63,692 Tim Hortons
THI-T 59.58 0.303 % 175,078 Enerplus Corp.
ERF-T 25.05 -1.957 % 643,493 Valeant Pharmaceuticals Intl.
VRX-T 129.15 0.623 % 113,755 TD Bank
TD-T 55.07 -0.181 % 807,328 Sun Life Financial Inc.
SLF-T 39.82 -0.35 % 371,946 Bank of Montreal
BMO-T 79.89 0.138 % 444,898 Thomson Reuters
TRI-T 39.47 0.305 % 302,066 Magna International
MG-T 118.14 1.043 % 226,232 Canadian Natural Resources
CNQ-T 47.59 -1.998 % 2,301,535 Bombardier Inc.
BBD.B-T 3.78 0.532 % 2,072,767 Bank of Nova Scotia
BNS-T 72.02 -0.014 % 730,912 National Bank of Canada
NA-T 46.40 0.216 % 353,608 Suncor Energy
SU-T 44.21 -1.712 % 2,278,202 Manulife Financial
MFC-T 21.43 -0.186 % 1,442,137 Power Corp of Canada
POW-T 30.445 0.082 % 270,791