TSX still overbought, but Aimia, Rogers worth a look

The S&P/TSX Composite did exactly nothing over the past five sessions, but remains overbought. By Relative Strength Index standards, the index sits just above the sell signal of 70. To be honest, I don't like this market too much.

With only four names, he list of oversold opportunities is tiny. Aimia Inc. stands out as a potential opportunity, however. Its stock is the most oversold of all TSX companies after falling 4.1 per cent over the past week. It's not cheap at 24 times forward earnings, but despite the stock price carnage, RBC just raised the target to $21.

Aimia is our focus chart this week. The last time it was this oversold was June 2013. While there's no guarantee this will happen again – no, seriously, there isn't – the stock proceeded to climb 40 per cent in the following six months.

Rogers Communications Inc. barely avoided oversold territory with an RSI of 30.7. The dividend is still compelling and even Jim "Booyah!" Cramer pointed it out as attractive during a Q&A with the Report on Business yesterday.

Energy and bank stocks dominate the list of toppy-looking, overbought Canadian stocks. There's never really been a bad time to buy Canadian bank stocks, but even so, I'd be inclined to wait a few days before adding to positions.

Energy infrastructure company Veresen Inc. is overbought, and it's hard to see the attraction. The stock is extremely expensive when measured by price-to-earnings, at 61 times trailing and 67 times forward. Generally, companies trading more expensively on forward earnings (as opposed to trailing) are always tricky because it mean analysts expect profits to decline. Veresen's average analyst price target is eight per cent below the current price.

Sometimes the best investment advice is boring, and in my opinion, this is one of those times. Investors who still have their RRSP contribution in cash should probably leave it there until more opportunities arise and the benchmark as a whole looks less extended.

As always, RSI is only a tool, and a blunt one at that. It's a good starting point, and has correctly signalled buy and sell points for stocks, but investors should always do thorough fundamental research before investing in anything.