The S&P/TSX Composite index is now bumping up against overbought levels by Relative Strength Index after climbing 0.95 per cent in the past five market sessions. This frothy environment leaves Cameco Corp. as really the only technically oversold opportunity worth taking seriously this week.
There are only two oversold stocks in the entire domestic benchmark which suggests investors should remain extremely cautious about adding new positions until things cool down. Yamana Gold Inc. remains stubbornly oversold after falling another 3.3 per cent for the week.
I don't have much faith in a gold miner bounce at this point. The bullion price remains below its 200-day moving average, which is usually an indication that the long-term bullish trend is broken – at least for now.
Cameco stock has responded well to the RSI oversold signal in the past. The last time the buy signal was breached in October 2013, the stock rallied more than 50 per cent to March 2014. RSI also worked as a trading signal in November 2012 and April 2013, although not quite as well.
The overbought list is smaller this week, which is a healthy sign. The list is still dominated by energy names – Advantage Oil & Gas Ltd, Paramount Resources Ltd and Whitecap Resources Inc. are the three most overbought stocks in the benchmark – but less so than last week. The sector is also, in general, less overbought so it's clear that some of the seemingly-irrational exuberance is burning off.
There are a few new non-energy names that look a bit stretched this week including Bank of Nova Scotia, CCL Industries Inc. and Granite REIT.
The usual warnings apply. Technicals can be good indicators of entry and exit points on stocks but investors need to research a stock's fundamentals in addition to watching the charts before buying or selling anything.
Follow Scott Barlow on Twitter @SBarlow_ROB.
|Name||Ticker||RSI||1W return %||PE Ratio TTM||PE Ratio Fwd|
|Yamana Gold Inc||YRI||23.13||-3.34||N/A||23.46|
|Element Financial Corp||EFN||31.02||-3.31||62.57||21.65|
|Westport Innovations Inc||WPT||32.53||-0.84||N/A||N/A|
|Advantage Oil & Gas Ltd||AAV||84.85||6.15||690.00||13.80|
|Paramount Resources Ltd -A||POU||82.13||3.01||N/A||184.15|
|Whitecap Resources Inc||WCP||80.26||8.11||51.88||21.10|
|Russel Metals Inc||RUS||78.44||2.31||22.63||16.60|
|Birchcliff Energy Ltd||BIR||77.39||0.97||28.52||17.93|
|Raging River Exploration Inc||RRX||76.71||3.56||36.90||20.91|
|Canadian Energy Services & T||CEU||75.75||2.70||59.02||35.05|
|Suncor Energy Inc||SU||75.65||3.83||13.51||11.18|
|Crew Energy Inc||CR||74.42||0.16||N/A||71.62|
|CCLIndustries Inc - Cl B||CCL.B||73.70||9.91||23.80||17.76|
|Bank Of Nova Scotia||BNS||73.30||1.80||12.95||12.00|
|Crescent Point Energy Corp||CPG||72.71||1.82||78.18||34.46|
|Imperial Oil Ltd||IMO||72.30||1.36||14.75||12.01|
|Granite Real Estate Investme||GRT.UN||72.17||2.11||10.76||N/A|
|Vermilion Energy Inc||VET||71.96||1.91||22.81||18.97|
|Kelt Exploration Ltd||KEL||71.17||1.97||N/A||45.77|
|Bell Aliant Inc||BA||70.82||2.23||21.97||17.76|
|Gibson Energy Inc||GEI||70.71||2.62||25.86||31.88|
|CGI Group Inc - Class A||GIB.A||70.68||2.54||15.46||12.86|
|Savanna Energy Services Corp||SVY||70.13||-1.02||25.20||17.40|
|Maple Leaf Foods Inc||MFI||69.85||4.36||N/A||69.70|