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The S&P/TSX composite dropped 1.1 per cent for the trading week ending with Thursday’s close, and there are more than 40 oversold index stocks according to Relative Strength Index (RSI). The benchmark stands 1.9 per cent higher for the year so far.

The list of oversold stocks in the index – those showing RSI readings below the buy signal of 30 – is dominated by precious metals and energy companies. Kinross Gold Corp., Osisko Gold Royalties Ltd., IAMGOLD Corp., and Agnico Eagle Mines Ltd. are the four most oversold benchmark constituents.

The most oversold energy stocks are Vermilion Energy Inc. and Nuvista Energy Ltd.

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Materials and energy stocks do not lend themselves to technical analysis well because moves in commodity prices usually trump technical factors. With this in mind, I picked online gambling company Stars Group Inc. for this week’s focus chart.

RSI buy signals have worked well in uncovering profitable buying opportunities for Stars Group stock in the past 24 months, although this is somewhat to be expected given the strong performance for much of the period.

Stars Group was consistently oversold through October 2016 but only a marginal rally followed (importantly, no major downdraft occurred either). After that, the buy signal in August 2017 predicted a major 52-per-cent rally.

Stars Group has endured a major sell-off in recent weeks, falling 26 per cent from recent highs. The price is now below the 200-day moving average which indicates a possible breakdown in upward trend.

Fundamental research is always important but this is even more the case here. If nothing has changed as far as the company’s future growth, then investors can be reasonably comfortable expecting a price bounce. I would be more optimistic if the price was above the 200-day moving average.

There are 15 overbought, technically vulnerable benchmark stocks according to RSI this week. Enercare is the most overbought company in the index, followed by Parkland Fuel Corp., Winpak Ltd., Ritchie Bros Auctioneers , Extendicare Inc., Rogers Communications Inc (B), Boardwalk REIT and ATS Automation Tooling Systems.

NAME RSI Price 200DMA Return 1W % Return YTD % PE Ratio TTM PE Ratio Fwd
K-T KINROSS GOLD CORP 11.47653 3.71 4.97615 -11.87648 -31.54982 14.56984687 19.301082
OR-T OSISKO GOLD ROYALTIES LTD 12.49631 10.43 13.32295 -10.31814 -27.58404 223.8485707 68.61842105
IMG-T IAMGOLD CORP 12.55371 5.31 7.22655 -18.80734 -27.55798 36.30838348 27.62499877
AEM-T AGNICO EAGLE MINES LTD 13.05608 45.46 56.08155 -13.81991 -21.25654 59.92647133 65.10483692
EDV-T ENDEAVOUR MINING CORP 13.41785 18.49 23.34285 -15.02757 -27.85798 115.5101803 18.36416842
G-T GOLDCORP INC 14.36849 13.68 17.16183 -12.92171 -14.41303 #N/A N/A 20.15783196
SSL-T SANDSTORM GOLD LTD 14.84458 4.65 5.9393 -16.21622 -25.95541 95.29781989 45.59145277
NGD-T NEW GOLD INC 15.43061 1.29 3.251175 -14 -68.76514 5.907815468 35.23357894
SMF-T SEMAFO INC 15.45644 2.92 3.6002 -13.35312 -18.20728 441.7604086 8.826477354
HBC-T HUDSON'S BAY CO 15.88248 9.25 10.42825 -9.667969 -17.78868 #N/A N/A #N/A N/A
WPM-T WHEATON PRECIOUS METALS CORP 16.45908 23.22 27.065 -15.22453 -15.73345 21.68339353 28.78075168
TXG-T TOREX GOLD RESOURCES INC 16.72186 7.93 11.85325 -11.09865 -33.52892 #N/A N/A 10.75274049
AGI-T ALAMOS GOLD INC-CLASS A 17.48386 5.65 7.29925 -10.03185 -30.89268 70.82270632 19.28970165
MAG-T MAG SILVER CORP 18.0308 10.3 13.90172 -11.7395 -33.63402 #N/A N/A #N/A N/A
ABX-T BARRICK GOLD CORP 18.22562 12.99 16.89695 -8.327453 -28.20548 22.34997914 14.4392885
BTO-T B2GOLD CORP 18.79901 2.77 3.524 -13.70716 -28.60825 25.8778272 10.08754663
FVI-T FORTUNA SILVER MINES INC 19.41057 5.76 6.5207 -6.341464 -12.19512 14.54746816 16.74911313
VET-T VERMILION ENERGY INC 19.73302 40.23 44.65035 -5.207352 -8.765198 49.16367918 24.87940631
FNV-T FRANCO-NEVADA CORP 20.34244 85.04 94.906 -10.03914 -14.77629 53.52403341 55.68080299
NVA-T NUVISTA ENERGY LTD 20.37774 7.22 8.33035 -16.14402 -9.975062 16.65912881 13.22344322
THO-T TAHOE RESOURCES INC 20.61247 4.89 6.037225 -12.98932 -18.90547 #N/A N/A 22.39326755
RSI Price 200DMA Return 1W % Return YTD % PE Ratio TTM PE Ratio Fwd
ECI-T ENERCARE INC 92.71847 28.83 19.2045 0.1150584 45.50532 42.59562951 33.52325581
PKI-T PARKLAND FUEL CORP 83.80158 41.03 29.91805 2.21724 56.26215 25.97146037 #N/A N/A
WPK-T WINPAK LTD 79.50378 50.19 46.3419 4.51895 7.383547 22.99608632 21.28857294
RBA-T RITCHIE BROS AUCTIONEERS 78.65422 49.87 40.9363 9.870015 33.87179 38.5560197 30.95663463
EXE-T EXTENDICARE INC 77.46518 8.2 8.3375 8.897742 -7.165236 28.9653363 25.625
RCI.B-T ROGERS COMMUNICATIONS INC-B 77.24973 69.31 62.2914 2.408392 9.951147 18.34849691 16.00692841
BEI-UN-T BOARDWALK REAL ESTATE INVEST 76.8816 50.75 44.36495 10.92896 19.2927 16.02249906 #N/A N/A
ATA-T ATS AUTOMATION TOOLING SYS 76.07394 21.41 17.6199 8.185952 37.68489 33.9863925 21.41
IFC-T INTACT FINANCIAL CORP 75.81998 105.48 99.8024 0.9957871 1.934166 18.70200888 14.91937765
GEI-T GIBSON ENERGY INC 74.84044 19.7 17.4088 0.5102041 12.66325 131.0633479 39.16500994
CAR-UN-T CAN APARTMENT PROP REAL ESTA 74.82698 46.8 38.55715 7.020352 27.88684 28.45770154 #N/A N/A
CPX-T CAPITAL POWER CORP 73.92929 27.18 24.6384 0.2582073 14.76685 25.91585101 20.04424779
ESI-T ENSIGN ENERGY SERVICES INC 70.66906 6.39 6.2736 7.394958 2.864191 17.57503044 #N/A N/A
WTE-T WESTSHORE TERMINALS INVESTME 70.66897 26.89 24.25675 5.08011 3.70955 15.80364653 15.25241066
TCN-T TRICON CAPITAL GROUP INC 70.29002 11.76 10.6875 2.887139 3.198171 8.919747443 11.213935

Source: Bloomberg/Scott Barlow

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