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

The S&P/TSX composite index jumped 1.2 per cent for the week ending with Thursday's close and this has pushed the benchmark well into overbought, technically vulnerable territory according to Relative Strength Index (RSI). The RSI level of 74 is well above the sell signal of 70, leaving the buy signal of 30 well into the rearview mirror.

Despite the strong performance of the index, there are a surprising eight companies on the oversold, technically attractive list of benchmark stocks this week (I expected none). Rogers Communications is the most oversold stock, followed by Centerra Gold Inc., Algonquin Power and Utilities, CCL Industries, Torex Gold Resources Inc., Fortis Inc., Northwest Co Inc and Transcontinental Inc.

I picked widely held Rogers Communications for the focus this week, even though the 200-day moving average trend line appears more relevant than RSI for the stock price.

Rogers has only been oversold once previously, in November, 2016, during the past 24 months. That oversold reading did not lead to an immediate recovery, but did mark the bottom after the stock declined from just under $60 to $50. Investors buying Rogers at this point had to be patient, but the price did rise to $69.58 by November, 2017.

The stock price is currently under the 200-day moving average trend line. The moving average has been an important price indicator previously, providing support in February, April and June of 2016. The 200-day moving average became resistance between November, 2016, and January, 2017.

As always, fundamental research is important here. The short-term technical outlook is encouraging, but investors must be confident that trends like cord-cutting aren't indicative of longer term weakness in the stock.

There are 29 overbought, technically vulnerable stocks in the index according to RSI this week, led by Husky Energy Inc., Labrador Iron Ore and Canada Goose Holdings Inc. Other prominent names on the list include Suncor Energy Inc., Teck Resources Ltd., Royal Bank, CIBC, and Blackberry Inc.