This article was published more than 6 years ago. Some information may no longer be current.
There are 11 oversold technically attractive index members this week starting with beleaguered Intertape Polymer Group Inc. Winpak Ltd. is next in line on the oversold list, followed by Keyera Corp., Empire Co. Ltd , Brookfield Property Partners, Thomson Reuters Corp. and Sleep Country Canada Holdings Inc..
I chose Brookfield Property Partners LP for the focus chart this week. The unit price has not shown a lot of volatility in the past two years but RSI buy signals have been able to identify effective buying opportunities for the trust.
An RSI buy signal in September 2015 successfully predicted a 20 per cent rally for Brookfield Property Partners and this was followed by another buy signal in February 2016 that presaged a 22.5-per-cent gain to August 2016. An RSI buy signal in June 2016 would also have worked – a 10-per-cent rally followed – but the unit price headed straight south after early August.
A September 2016 RSI buy signal was ineffective but November's buy signal was reasonably profitable as the price climbed 11 per cent to mid-April. In 2017, an August buy reading was a disquieting head fake - a small price appreciation turned in to a sharp selloff.
Brookfield Property Partners boasts a 5.3-per-cent distribution yield and this should help protect against downside risk. In addition, fundamental research – which should always accompany technical analysis – could indicate a strong buying opportunity. The most recent price drop, however was rapid and severe and investors might want to wait for more stability before buying the trust.
There are nine overbought, technically vulnerable S&P/TSX Composite members this week led by Centerra Gold Inc. Great Canadian Gaming Corp., Iamgold Corp., Dollarama Inc. and New Gold Inc. follow close behind.