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The week's most oversold and overbought stocks on the TSX

A brutal week for Canadian investors saw the S&P/TSX Composite drop 1.6 per cent to Thursday's close. In terms of Relative Strength Index (RSI), the entire benchmark is close to being technically oversold with a reading of 35 that is far closer to the RSI buy signal of 30 than the overbought, sell signal of 70.

There are 18 oversold, technically attractive index constituents this week led by Aimia Inc. and Hudson's Bay Co. Other prominent names on the oversold list include Fairfax Financial Holdings Ltd., Suncor Energy Inc., Teck Resources Ltd. and Encana Corp.

I chose Teck Resources for the focus chart this week despite the usual misgivings about technical analysis and commodity stocks. Resource stock prices often move more with commodity prices than technicals, but in the case of Teck I'm hoping the diversified revenue sources (across different industrial metal and energy sectors) will help offset this. The trading range for Teck has been so remarkably wide that the chart is difficult to read no matter how I plot the data.

The stock price has been sensitive to RSI sell signals and the 200-day moving average in the past 24 months. Sell signals, RSI readings above 70, successfully predicted significant corrections in April and November 2016, when the Teck was trading well above its 200-day moving average. Buy signals have been less successful, as the stock failed to rally after sub-30 levels were hit in July, August and November 2015 and more recently in May of this year.

The current buy signal seems unreliable. There could very well be a solid fundamental thesis supporting a rally for Teck Resources – fundamental research should always accompany technical analysis – but RSI on its own does not appear to represent a compelling reason to buy the stock on its own at the current time. This might change if the price regains the 200 day moving average trend line.

The list of overbought, technically vulnerable index members by RSI is small at five stocks this week, as we'd expect after market weakness. CCL Industries Inc. is the most overbought company in the benchmark, followed by BRP Inc., Dream Global REIT, Pure Industrial REIT and Gildan Activewear Inc.

RSIPrice200DMAReturn 1w %Return YTD %PE Ratio TTMPE Ratio Fwd
AIM-TAIMIA INC13.957061.487.76705-21.80075-80.71334#N/A N/A#N/A N/A
HBC-THUDSON'S BAY CO21.661798.4612.9795-12.05821-35.54762#N/A N/A#N/A N/A
MEG-TMEG ENERGY CORP23.409514.166.501625-5.454545-54.92958#N/A N/A#N/A N/A
AKG-TASANKO GOLD INC23.441981.884.12845-16.44444-54.3689373.0171018213.6501717
PLI-TPROMETIC LIFE SCIENCES INC23.766331.852.3691-8.415842-17.04036#N/A N/A#N/A N/A
SCL-TSHAWCOR LTD26.1251527.7434.2187-5.549881-21.92109#N/A N/A13.92570281
FFH-TFAIRFAX FINANCIAL HLDGS LTD26.13292562.29644.9484-5.971572-11.43073#N/A N/A16.60971361
SU-TSUNCOR ENERGY INC27.4488839.1640.7614-4.113614-9.43306457.8149888621.35223555
PXT-TPAREX RESOURCES INC27.5730614.316.42165-6.961614-15.3846130.60757124#N/A N/A
OTEX-TOPEN TEXT CORP27.8033141.7243.26865-6.0783431.38835333.9518030713.90266309
TECK.B-TTECK RESOURCES LTD-CLS B28.0567221.5827.90485-11.54114-19.343447.4167276165.32971104
IPL-TINTER PIPELINE LTD28.2961125.4727.97495-2.525832-11.9719917.9385773217.29124236
CNQ-TCANADIAN NATURAL RESOURCES28.5044436.8441.8373-4.055914-12.72637#N/A N/A17.86614937
BTE-TBAYTEX ENERGY CORP29.043623.185.14105-9.915014-51.52439#N/A N/A#N/A N/A
ELD-TELDORADO GOLD CORP29.396743.544.44225-8.051948-17.64065159.369838125.95252641
ENGH-TENGHOUSE SYSTEMS LTD29.4095252.5854.911-14.50407-5.4970327.719173827.7174486
EIF-TEXCHANGE INCOME CORP29.4820131.938.08255-2.59542-21.8084817.6875740212.13389121
ECA-TENCANA CORP29.8151911.6714.9539-2.923193-25.7325101.60384119.36747766
RSIPrice200DMAReturn 1w %Return YTD %PE Ratio TTMPE Ratio Fwd
CCL.B-TCCL INDUSTRIES INC - CL B77.7917168.2753.963035.01546529.8662532.6942634824.19206237
DOO-TBRP INC/CA- SUB VOTING71.0972738.5628.16215-2.30554836.0141124.8663346716.86051596
DRG.UN-TDREAM GLOBAL REAL ESTATE INV70.5400410.679.549651.42585616.7737216.97052993#N/A N/A
AAR.UN-TPURE INDUSTRIAL REAL ESTATE70.456866.975.85411.16110327.3474418.56577342#N/A N/A
GIL-TGILDAN ACTIVEWEAR INC70.1877940.8235.880350.418204220.5831419.0783440817.92083156

Source: Bloomberg/Scott Barlow

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