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.
Follow us on Twitter:,
Companies & investments Mentioned In This Article (22)
MG-T 123.28 0.489 % 355,018 National Bank of Canada
NA-T 52.31 0.616 % 1,280,503 Canadian Tire Corporation
CTC.A-T 112.32 -0.346 % 169,539 TD Bank
TD-T 57.25 -0.227 % 3,202,629 Sun Life Financial Inc.
SLF-T 40.43 0.149 % 1,409,775 Suncor Energy
SU-T 44.63 0.95 % 2,545,618 Valeant Pharmaceuticals Intl.
VRX-T 127.38 0.616 % 263,171 Metro Inc.
MRU-T 70.49 0.085 % 253,223 Canadian Natural Resources
CNQ-T 47.39 1.434 % 1,651,611 Gildan Activewear
GIL-T 62.34 -0.32 % 242,260 Shaw Communications
SJR.B-T 27.39 0.403 % 555,769 Royal Bank of Canada
RY-T 80.77 0.273 % 2,162,166 Power Corp of Canada
POW-T 32.04 0.219 % 858,197 Manulife Financial
MFC-T 21.95 0.183 % 3,249,864 Catamaran Corp.
CCT-T 51.23 0.471 % 303,065 Tim Hortons
THI-T 87.40 0.344 % 2,210,505 Enerplus Corp.
ERF-T 24.89 1.758 % 501,679 Bank of Montreal
BMO-T 83.66 0.783 % 1,914,260 Thomson Reuters
TRI-T 41.20 0.219 % 902,851 Bombardier Inc.
BBD.B-T 3.66 -3.175 % 9,687,858 Bank of Nova Scotia
BNS-T 72.04 0.53 % 1,572,463 George Weston
WN-T 86.17 -0.035 % 97,012