Crash landings for Air Canada and Bombardier stocks highlight this week's TSX technical review.
The domestic equity benchmark enjoyed a strong 2.1 per cent return over the past five trading sessions (Thursday to Thursday) but is once again approaching overbought levels according to the Relative Strength Index indicator. There's still room to run, but with an RSI reading of 65, it won't be long before the S&P/TSX Composite hits the sell signal of 70.
This week's list of oversold stocks is small, but very interesting. Bombardier Inc. stock got hammered by 12 per cent after poor earnings and fell below the RSI buy signal of 30. Air Canada, confronted with higher U.S. dollar fuel costs got hit even harder, down 24 per cent.
Rogers Communications is now the second most oversold stock in the TSX with an RSI of 26.4. Thomson Reuters stock fell 5.9 per cent and now has an attractive forward price to earnings ratio of 18.5 times.
Energy stocks dominate the list of technically overbought domestic equities. Veresen Inc. is the most extended TSX member with an RSI over 80. Precious metals stocks are also present among the overbought with Detour Gold Corp., Silvercorp Metals and Silver Standard on the list.
As far as actionable ideas, Rogers and Thomson Reuters are compelling enough to merit further study. The stocks pay dividends of 4.2 per cent and 3.9 per cent respectively, which should protect at least partially protect them from further downside.
Rogers is the focus chart for the week. The last time the stock was this oversold, June 2013, it rallied more than 20 per cent.
Usual caveats: RSI is an effective tool for buying and selling stocks but should not be used as the sole determinant of investing decisions. The numbers change quickly and by the time you're reading this, the RSI could be markedly different from what's in the tables.
|RSI||1W Return %||PE Ratio TTM||PE Ratio Fwd|
|Dream Unlimited-CL A SUB VOT||DRM||18.75||-3.32||N/A||N/A|
|Rogers Communications Inc-B||RCI.B||26.39||-5.09||13.28||12.94|
|Air Canada-Class B||AC.B||28.05||-23.65||N/A||5.95|
|Dundee Corp -CL A||DC.A||28.17||-1.12||N/A||N/A|
|Thomson Reuters Corp||TRI||29.36||-5.87||23.38||18.46|
|Detour Gold Corp||DGC||77.91509||19.24||19.4||88.93|
|Inter Pipeline Ltd||IPL||77.61499||1.27||N/A||23.88|
|Silvercorp Metals Inc||SVM||77.30376||24.4||19.54||6.88|
|Tahoe Resources Inc||THO||76.11613||13.18||N/A||36.67|
|Jean Coutu Group Inc-Class A||PJC.A||75.82751||3.42||14.91||17.4|
|WSP Global Inc||WSP||74.47085||0.06||22.55||20.29|
|Cogeco Cable Inc||CCA||73.63995||1.7||9.23||11.48|
|Pason Systems Inc||PSI||73.45016||2.19||42.8||19.54|
|Birchcliff Energy Ltd||BIR||73.32565||9.6||22.29||22.29|
|Silver Standard Resources||SSO||73.10469||7.74||N/A||N/A|
|Canadian Oil Sands Ltd||COS||72.98669||2.92||11.44||12.68|
|Constellation Software Inc||CSU||72.38336||5.71||54.05||20.49|
|Canadian Natural Resources||CNQ||71.99702||2.43||19.48||15.07|
|Alimentation Couche-Tard -B||ATD.B||71.28929||3.18||20.28||18.05|
|RioCan Real Estate Invst Tr||REI.U||71.22653||3.03||11.2||N/A|
|Open Text Corp||OTC||71.06768||2.68||36.76||14.86|
|Trinidad Drilling Ltd||TDG||70.67887||5.65||18.39||17.1|
|Precision Drilling Corp||PD||70.37556||8.69||16.61||12.66|
|Silver Wheaton Corp||SLW||70.25965||8.81||19.21||27.11|