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Inside the Market The week’s most oversold and overbought stocks on the TSX

The S&P/TSX Composite took a bit of a breather during the trading week ending with Thursday’s close, finishing roughly flat (up 0.04 per cent). The benchmark stands 9.9 per cent higher for the year. According to Relative Strength Index (RSI), the index is just barely in technically neutral territory, with a reading of 68 that’s only two points from the RSI sell signal and nowhere close to the oversold RSI buy signal of 30.

There are only two technically attractive, oversold index members by RSI this week – Sierra Wireless Inc. and SNC-Lavalin Group Inc. We featured SNC last week, which doesn’t leave much choice except to focus on Sierra Wireless.

RSI buy signals have had a mixed record in identifying profitable entry points for Sierra Wireless stock in the past 36 months. A buy signal in June of 2016 was followed by a reasonable 11.2-per-cent rally before the end of July, 2016, but another buy signal in August, 2016, was followed by a multi-month period of sideways price movement.

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A series of buy signals in August, 2017, presaged a 13-per-cent rally, but the stock headed immediately southwards again in November. February of 2018 saw the most successful RSI buy signal as the price climbed 35 per cent by the end of September.

The stock was also oversold in late December, 2018, and rose 16 per cent to Feb. 13 of this year. The problem is that holders of the stock got little warning before the price then plummeted to current levels.

This is a treacherous one. ESI buy signals have worked okay, but rallies have consistently been followed by rapid, severe downward moves.

There could be a solid fundamental story behind Sierra Wireless – fundamental research should always be completed before any market transaction – but the chart on its own makes it look too volatile to trade based on RSI.

There are 26 overbought, technically vulnerable S&P/TSX Composite stocks trading above the RSI sell signal this week. Firstservice Corp. was the most overbought stock in the index followed by Choice Properties REIT, Air Canada, Constellation Software Inc., First Capital Realty Inc. and Brookfield Property Partners.

Sierra

The Globe and Mail

NAME RSI Price 200DMA Return 1W % Return YTD % PE Ratio TTM PE Ratio Fwd
SW-T SIERRA WIRELESS INC 22.55096 15.63 22.36073 -25.5561 -17.83961 #N/A N/A 29.82334986
SNC-T SNC-LAVALIN GROUP INC 23.66433 33.45 50.99875 -8.994852 -26.85105 12.85987 117.3684211
CTC-A-T CANADIAN TIRE CORP-CLASS A 31.81937 139.26 158.5848 -7.790583 -1.220453 12.68003742 10.74537037
CHE-UN-T CHEMTRADE LOGISTICS INCOM FD 33.23776 9.25 13.7184 -17.97557 -9.418156 #N/A N/A 22.02380952
NAME RSI Price 200DMA Return 1W % Return YTD % PE Ratio TTM PE Ratio Fwd
FSV-T FIRSTSERVICE CORP 83.0239 116.11 101.4002 4.267857 24.64511 45.87219605 28.81504977
CHP-UN-T CHOICE PROPERTIES REIT 82.04124 13.36 12.1689 1.815431 17.40539 7.403688132 #N/A N/A
AC-T AIR CANADA 81.0278 31.68 25.42335 2.565747 23.18952 19.02401079 7.20655141
CSU-T CONSTELLATION SOFTWARE INC 80.07858 1128.89 955.717 14.00117 29.61687 48.80443236 25.60986686
FCR-T FIRST CAPITAL REALTY INC 79.7907 21.76 20.13375 2.308055 15.22546 22.63528403 #N/A N/A
BPY-UN-T BROOKFIELD PROPERTY PARTNERS 79.03065 26.51 25.00015 0.7607455 20.29973 #N/A N/A #N/A N/A
GRT-UN-T GRANITE REAL ESTATE INVESTME 78.47803 61.39 54.58731 2.149642 15.65733 20.59014094 #N/A N/A
CCL-B-T CCL INDUSTRIES INC - CL B 75.96664 59.04 59.132 4.287471 18.55773 21.60637422 19.66033966
DSG-T DESCARTES SYSTEMS GRP/THE 75.08452 43.81 40.78885 4.309524 21.59312 79.30163021 25.20556857
OR-T OSISKO GOLD ROYALTIES LTD 74.42015 13.41 11.46165 4.053001 11.52882 314.0515187 74.08839779
CIGI-T COLLIERS INTERNATIONAL GROUP 73.98625 91.1 92.41165 6.649497 20.9988 23.10302904 14.5469156
KL-T KIRKLAND LAKE GOLD LTD 73.98407 44.23 28.6666 2.029052 24.29775 29.88020015 20.87404253
KMP-UN-T KILLAM APARTMENT REAL ESTATE 73.45673 17.48 15.87575 3.137711 11.70941 8.343468106 #N/A N/A
PPL-T PEMBINA PIPELINE CORP 73.13726 48.42 44.65325 1.731053 19.46953 19.69166726 17.89356984
SSL-T SANDSTORM GOLD LTD 72.53661 7.23 5.6584 1.123595 13.92405 97.06450124 71.70001489
ASR-T ALACER GOLD CORP 72.12413 3.4 2.4422 1.492537 34.92064 64.82561596 6.761362925
L-T LOBLAW COMPANIES LTD 71.52233 66.85 56.57488 0.4658852 9.392898 21.22507196 14.99215071
LIF-T LABRADOR IRON ORE ROYALTY CO 71.30141 31.74 25.37982 -1.397082 31.0231 16.45407854 9.068571429
AX-UN-T ARTIS REAL ESTATE INVESTMENT 71.18906 10.74 11.67805 -0.831793 16.63786 8.732133089 8.16730038
TA-T TRANSALTA CORP 71.14975 7.58 6.9608 1.759134 34.52594 #N/A N/A #N/A N/A
RNW-T TRANSALTA RENEWABLES INC 70.30382 12.12 11.65455 -0.4221405 18.3617 15.53015873 15.69948187
QBR-B-T QUEBECOR INC -CL B 70.29024 31.81 27.3095 0.2529244 10.33403 20.61874346 16.66317444
OTEX-T OPEN TEXT CORP 70.26872 49.6 46.85045 1.159479 11.75281 33.49056773 13.37501892
X-T TMX GROUP LTD 70.19949 83.12 81.50335 0.9828904 17.6587 17.29805021 15.22902162
ECN-T ECN CAPITAL CORP 70.12513 3.97 3.59025 0.2518892 15.36232 17.51845036 15.50342807
AGI-T ALAMOS GOLD INC-CLASS A 70.03333 6.08 6.02565 5.604203 22.81059 #N/A N/A 29.1876055

Source: Scott Barlow, Bloomberg

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