Overbought, technically extended stocks outnumber oversold domestic equities 32 to one this week and, with the S&P/TSX composite only a fraction below the Relative Strength Index "sell" signal, investors should hold off on adding more stocks until the market cools off.
The domestic benchmark added 0.9 per cent in the past five sessions and now has an RSI of 69.1, less than a full point below the 70 mark that predicts a pullback.
A geopolitically-inspired surge in oil prices sees energy stocks dominate the overbought list. Suncor Energy Inc., Lightstream Resources Ltd., Birchcliff Energy Ltd., Paramount Resources Ltd. and Bonterra Energy Corp. are all among top 10 stocks most vulnerable to a pullback according to RSI.
Risk-averse investors should avoid these stocks for now but on the other hand, stock prices are likely to continue higher as long as Iraq's political implosion continues.
Investors in domestic gold stocks had a great week but they must have strong stomachs to deal with the crazy volatility in the sector. In the past five trading days, Semafo Inc. jumped 22 per cent, Argonaut Gold leaped 27.5 per cent and Detour Gold Corp rose 17.3 per cent.
The benchmark, approaching overbought territory, is the focus chart for the week. The S&P/TSX composite has been extremely strong since mid-2013 and overbought readings have predicted a period of flat performance rather than a sell-off.
Still, seasonally low trading volumes and overall technical froth can make for a dangerous combination. Risk-averse investors should just head to the cottage and wait this one out. There will likely be better buying opportunities later in the summer.
The usual warnings apply. Technically analysis is only a part of the investment picture and should be used in combination with fundamental analysis.
Oversold | RSI | 1 W Return % | PE Ratio TTM | PE Ratio Fwd |
---|---|---|---|---|
Artis Real Estate Investment | 27.94 | -2.42 | 14.90 | 10.62 |
Granite Real Estate Investme | 30.55 | -2.16 | 15.37 | N/A |
Overbought | RSI | 1 W Return % | PE Ratio TTM | PE Ratio Fwd |
Canadian Pacific Railway Ltd | 82.90 | 1.80 | 29.60 | 21.68 |
Torex Gold Resources Inc | 80.31 | 17.83 | N/A | N/A |
Suncor Energy Inc | 79.69 | 7.12 | 14.44 | 11.84 |
Lightstream Resources Ltd | 79.61 | 9.92 | N/A | 15.00 |
Freehold Royalties Ltd | 79.54 | 2.91 | 28.75 | N/A |
Birchcliff Energy Ltd | 76.05 | 0.00 | 21.80 | 20.86 |
Detour Gold Corp | 75.97 | 17.27 | N/A | 59.79 |
Paramount Resources Ltd -A | 75.94 | 3.32 | N/A | 85.81 |
Bonterra Energy Corp | 75.43 | 1.80 | 25.71 | 19.79 |
Iamgold Corp | 75.33 | 12.82 | 14.73 | 27.01 |
Whitecap Resources Inc | 75.02 | 4.12 | 58.57 | 21.27 |
New Gold Inc | 74.66 | 10.15 | 76.19 | 36.07 |
Oceanagold Corp | 74.51 | 22.56 | 7.16 | 17.35 |
Baytex Energy Corp | 74.12 | 4.42 | 90.91 | 15.89 |
Semafo Inc | 73.78 | 22.16 | N/A | 20.30 |
Bank Of Nova Scotia | 73.68 | 0.31 | 13.27 | 12.36 |
Canadian Natl Railway Co | 73.07 | 1.48 | 21.67 | 18.72 |
Pengrowth Energy Corp | 73.01 | 4.62 | N/A | 60.32 |
Canadian Natural Resources | 72.96 | 3.98 | 18.67 | 13.49 |
Pacific Rubiales Energy Corp | 72.64 | 5.17 | 15.91 | 8.51 |
Novagold Resources Inc | 72.33 | 14.06 | N/A | N/A |
Surge Energy Inc | 72.27 | 6.01 | 29.08 | 20.97 |
Veresen Inc | 72.15 | -0.34 | 47.65 | 75.99 |
Industrial Alliance Insuranc | 72.03 | 9.13 | 12.41 | 12.33 |
Enerflex Ltd | 71.45 | 1.97 | 33.05 | 14.79 |
Penn West Petroleum Ltd | 71.40 | 3.24 | N/A | 32.23 |
Osisko Mining Corp | 71.28 | 5.01 | N/A | 28.63 |
Argonaut Gold Inc | 70.85 | 27.48 | 36.03 | 25.74 |
China Gold International Res | 70.81 | 12.54 | 28.30 | 15.65 |
Laurentian Bank Of Canada | 70.52 | 1.63 | 10.26 | 8.63 |
Saputo Inc | 70.12 | 4.92 | 21.55 | 18.86 |
Advantage Oil & Gas Ltd | 70.08 | -1.21 | N/A | 12.55 |
Crescent Point Energy Corp | 69.92 | 2.38 | 60.67 | 28.80 |