The S&P/TSX Composite rose 0.7 per cent for the trading week ending with Thursday's close and is now 4.03 per cent lower for 2018 so far.
In terms of technicals, the index's Relative Strength Index (RSI) score of 42.9 is in neutral territory between the oversold RSI buy signal of 30 and the overbought sell signal of 70.
There are 17 companies in the benchmark trading with attractive RSI readings below the 30 buy signal, suggesting the possibility of a short-term bounce in price.
The most oversold stocks this week are Uni-Select Inc., Crew Energy Inc., IGM Financial Inc., Klondex Mines Ltd., Element Fleet Management Corp., Lucara Diamond Corp., Shaw Communications Inc. and Manulife Financial Corp.
I picked Stantec Inc. as the focus chart this week after the engineering company endured an 8.0-per-cent beating in the wake of an earnings report that came in below analyst expectations.
RSI buy signals have successfully identified profitable buying opportunities for Stantec in the past 24 months although they have been rare. A late February 2016 buy signal presaged a 20-per-cent price rally to June 8, 2016. An August 2016 buy signal was less successful - a small rally was followed by a decline to re-test the lows.
A November 2016 RSI buy signal worked much better as Stantec stock immediately ramped higher afterwards, climbing 35.5 per cent to February 2017.
RSI provided another buy signal in May of 2017 and a 21.4 per cent rally occurred to October 27.
The technical outlook for Stantec looks promising, but investors considering adding it to their portfolio should first complete fundamental analysis to understand fully why the company missed earnings.
More positively, 40 per cent of their revenue comes from the U.S., so the accelerating economy down south should help. Fundamental analysis will also assess that possibility.
There are only five overbought, technically vulnerable S&P/TSX Composite members trading with RSI levels above the sell signal of 70. Stars Group Inc. tops the list followed by Morneau Shepell Inc., CCL Industries Inc., TMX Group Ltd., Bombardier Inc. CanREIT and Spin Master Corp.