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The S&P/TSX Composite eased higher by 0.2 per cent for the abbreviated trading week ending with Thursday’s close.

The benchmark is in technically neutral territory as measured by Relative Strength Index (RSI) with a 36 reading that is between the oversold buy signal of 30 and the overbought RSI sell signal of 70.

There are 29 index member stocks trading at oversold levels below the RSI 30 buy signal. TransAlta Corp. is the most oversold company in the benchmark, followed by Peyto Exploration and Development Corp., Knight Therapeutics Inc., Keyera Corp., CIBC and Computer Modelling Group Ltd. ONEX Corp., National Bank, Hudson’s Bay and Power Corp are other prominent names on this week’s list.

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I chose CIBC for the focus chart this week because it’s widely held, and I also wanted to attempt to gain more insight into recent bank sector underperformance.

RSI buy signals have worked well for CIBC stock over the past three years but like a lot of companies we’ve looked at lately, the signals have been less effective recently.

CIBC was deeply oversold in January 2016 before rallying 25 per cent in the next six months. In November 2016, an RSI oversold signal was followed by a 23-per-cent appreciation to March of 2017. A May 2017 buy signal would have worked out for patient investors who were eventually rewarded with a 16-per-cent rally by January 2018.

A February 2018 buy signal was only marginally effective but another series of buy signals in April 2018 led to a 13-per-cent rise in the stock price in early September. October 2018 buy signals were ineffective.

From a technical standpoint, the most concerning event for the stock price occurred in late November when the 200-day moving average trend line acted as resistance for an extended rally, and further declines followed. Investors might have to wait until the price rises sustainably above the trend line to trust the next rally.

We are only dealing with technicals here, and the past history of domestic bank stocks suggests that there could be a value-based argument for future gains – fundamental analysis should accompany any investment decision.

There are six overbought, technically vulnerable S&P/TSX Composite stocks this week with precious metals stocks dominating.

RSI Price 200DMA Return 1W % Return YTD % PE Ratio TTM PE Ratio Fwd
TA-T TRANSALTA CORP 8.638443 5.56 7.00365 -9.74026 -23.68204 #N/A N/A #N/A N/A
PEY-T PEYTO EXPLORATION & DEV CORP 12.28902 6.66 10.6792 -7.112971 -52.93421 6.921076703 12.26519337
GUD-T KNIGHT THERAPEUTICS INC 19.77219 7.59 8.1575 -3.065134 -8.66426 54.05559502 70.93457944
KEY-T KEYERA CORP 19.99284 24.55 34.19695 -7.232549 -27.03061 14.3640075 16.41042781
CM-T CAN IMPERIAL BK OF COMMERCE 20.71415 101.06 115.4727 -0.8614872 -13.50187 8.381783145 8.05965388
CMG-T COMPUTER MODELLING GROUP LTD 21.91425 5.56 8.7752 -7.178632 -39.19524 22.54507979 19.71631206
BIR-T BIRCHCLIFF ENERGY LTD 22.19537 2.64 4.3688 -5.714282 -38.32761 10.14343003 7.719298246
ONEX-T ONEX CORPORATION 22.35777 71.72 90.5663 -0.9392265 -21.92729 #N/A N/A 150.2083905
SCL-T SHAWCOR LTD 23.64543 15.48 24.46575 -2.025316 -42.15021 19.74446924 29.37381404
NA-T NATIONAL BANK OF CANADA 23.97128 55.62 62.10065 -1.627167 -8.686887 9.286346888 8.749410099
MAXR-T MAXAR TECHNOLOGIES LTD 24.94965 13.95 48.15395 -9.650259 -82.0373 263.5840325 2.939285248
PD-T PRECISION DRILLING CORP 25.12816 2.33 4.10155 -2.916667 -38.84515 #N/A N/A #N/A N/A
CSH-UN-T CHARTWELL RETIREMENT RESIDEN 25.14056 13.55 14.9377 -3.075821 -13.64758 53.91168109 #N/A N/A
TFII-T TFI INTERNATIONAL INC 25.45192 34.92 41.28635 0.05730659 7.976742 12.88894694 9.80348119
IPL-T INTER PIPELINE LTD 26.23029 19.13 23.21475 -0.5717255 -20.98568 12.40033653 11.81593576
CAS-T CASCADES INC 26.56233 9.74 12.3801 -13.88152 -27.59214 10.40835123 #N/A N/A
MSI-T MORNEAU SHEPELL INC 26.60183 24.29 26.60605 -1.715093 12.27993 49.60939681 30.7079646
LUC-T LUCARA DIAMOND CORP 27.45428 1.43 2.06965 2.142857 -46.47422 34.27055149 8.063333846
ZZZ-T SLEEP COUNTRY CANADA HOLDING 27.64081 19.43 29.98355 -2.704056 -40.36567 11.92024559 10.30769231
PSI-T PASON SYSTEMS INC 27.66237 17.68 19.94415 -4.225352 0.7502616 32.74074131 19.75418994
HBC-T HUDSON'S BAY CO 28.17327 7.13 9.65205 -7.761966 -36.55077 #N/A N/A #N/A N/A
MTL-T MULLEN GROUP LTD 28.25097 11.67 14.7639 -2.506266 -23.04062 27.5261819 16.67142857
FTT-T FINNING INTERNATIONAL INC 28.35085 22.85 30.78895 -2.099399 -26.08489 13.17081094 11.23954747
ARX-T ARC RESOURCES LTD 28.44695 7.77 13.0607 -5.589308 -45.07077 14.38135196 13.32761578
POW-T POWER CORP OF CANADA 28.6348 23.88 28.59502 -0.9950249 -22.20541 6.432368055 7.386328487
SIA-T SIENNA SENIOR LIVING INC 29.05145 15.58 17.00455 -3.529412 -10.22874 40.91386535 #N/A N/A
X-T TMX GROUP LTD 29.36476 70.53 81.51595 -1.301427 2.930169 14.85662478 13.13163284
FCR-T FIRST CAPITAL REALTY INC 29.86893 18.53 20.15145 -1.858635 -6.594109 18.79872851 #N/A N/A
PKI-T PARKLAND FUEL CORP 29.96053 33.15 35.9302 -0.569886 27.81691 16.97112376 #N/A N/A
RSI Price 200DMA Return 1W % Return YTD % PE Ratio TTM PE Ratio Fwd
OGC-T OCEANAGOLD CORP 77.89133 4.73 3.700925 12.08531 47.97996 11.08335594 18.5413559
KL-T KIRKLAND LAKE GOLD LTD 73.16515 35.44 25.60255 5.476191 84.53057 23.28475994 18.51646158
EDV-T ENDEAVOUR MINING CORP 73.02339 21.98 21.3111 8.009826 -14.24113 63.86253508 17.49403592
OR-T OSISKO GOLD ROYALTIES LTD 72.95206 11.84 11.4915 4.964539 -17.3693 277.2833759 77.38562092
ASR-T ALACER GOLD CORP 72.00732 2.5 2.30285 5.932203 12.10762 43.5850228 14.09673749
WPM-T WHEATON PRECIOUS METALS CORP 71.48848 26.52 25.14115 1.726122 -2.714375 32.34678537 41.71666281

Source: Bloomberg/Scott Barlow

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