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The S&P/TSX Composite eased higher by just under one half of one per cent for the trading week ending with Thursday’s close.

The benchmark is in neutral technical territory, according to Relative Strength Index (RSI), but the current reading of 69 is a lot closer to the RSI overbought, sell signal of 70 than the oversold buy signal of 30. The index is 12.6 per cent higher for 2019.

There are seven benchmark constituents trading with attractive RSI levels below the buy signal of 30. Cascades Inc is the most oversold company in the index, followed by Winpak Ltd., Uni-Select Inc., Transcontinental Inc. (A) and Spin Master Corp.

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I picked Spin Master, a toy manufacturer that opened for trading in July of 2015, as the focus chart this week.

As it turns out, the technical patterns for Spin Master are straightforward – RSI buy signals were highly effective when the price was above or close to the 200-day moving average trend line, and stopped working when the price fell below.

In February, the 200-day trend seems to have provided price support during an RSI buy signal and a 41-per-cent rally followed to May, 2017. Another buy signal in June 2017 successfully predicted a significant 67 per cent rally in the following nine months.

An April 2018 RSI buy signal was also effective – the stock climbed 23.4 per cent to July.

Spin Master’s price fell below the 200-day moving average in October 2018 and has remained there since. There were a series of buy signals in October, November and December afterwards that failed to result in significant rallies.

There could be a compelling fundamental case for Spin Master to rally from here – fundamental research should be part of all portfolio transactions - but recent history suggests that RSI buy signals can’t be relied upon right now as entry points.

There are 31 overbought, technically vulnerable S&P/TSX Composite member stocks this week. Northview Apartment REIT is the frothiest company in the index, followed by Saputo Inc., Transalta Renewables Inc., Canadian Utilities Ltd. (A) and Cogeco Communications Inc.

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RSIPrice200DMAReturn 1W %Return YTD %PE Ratio TTMPE Ratio Fwd
CAS-TCASCADES INC18.518948.0611.57635-8.172531-20.9188710.612902218.326446281
WPK-TWINPAK LTD21.4678241.2246.349-3.872172-13.6963318.2747765617.52375799
UNS-TUNI-SELECT INC24.4700512.1220.4212-2.547771-36.939728.06115518810.81109056
TCL-A-TTRANSCONTINENTAL INC-CL A25.7359617.2524.6755-9.287599-9.9461377.8727148594.855052069
TOY-TSPIN MASTER CORP-SUB VTG SHR26.0833738.0248.11945-15.1975-1.0158918.1417420216.32172268
MTY-TMTY FOOD GROUP INC27.9260356.9660.9227-2.431973-5.16822713.7613490917.83902286
CFP-TCANFOR CORP29.2134613.9823.4484-2.404526-16.515434.0265845449.14921466
RSIPrice200DMAReturn 1W %Return YTD %PE Ratio TTMPE Ratio Fwd
NVU-UN-TNORTHVIEW APARTMENT REAL EST86.7479728.9926.10645.18918920.4477315.90486257#N/A N/A
SAP-TSAPUTO INC81.6159344.7740.983754.8960814.7995126.6524745123.3908046
RNW-TTRANSALTA RENEWABLES INC81.6023412.8411.68934.41537224.8124613.9499108615.01754386
CU-TCANADIAN UTILITIES LTD-A81.5046136.1332.116553.02943716.5373814.3292219216.44515248
CCA-TCOGECO COMMUNICATIONS INC78.8920184.4668.52213.30538330.1540311.6413407212.67406963
AX-UN-TARTIS REAL ESTATE INVESTMENT77.9108411.1811.488255.16431922.262769.9507538328.534351145
BAM-A-TBROOKFIELD ASSET MANAGE-CL A77.7814860.9955.437953.34791417.8298513.04365126#N/A N/A
KML-TKINDER MORGAN CANADA LTD77.7425215.5114.620182.1526429.89659711.2722355422.54360465
BAD-TBADGER DAYLIGHTING LTD77.6556239.1831.14592.90347922.2869819.0309470518.10536044
PWF-TPOWER FINANCIAL CORP77.6366329.7829.245451.43003115.3310110.691727738.795038393
BMO-TBANK OF MONTREAL76.97802102.68100.41820.935490117.3415611.3564172310.51941399
DSG-TDESCARTES SYSTEMS GRP/THE76.9412645.5241.25771.89218928.5317877.5426601422.45322183
PPL-TPEMBINA PIPELINE CORP75.8532748.9745.007653.1769123.6775821.8961723618.67658276
TCN-TTRICON CAPITAL GROUP INC75.7522611.2710.6682.62919316.821469.35553578210.66602371
TRP-TTRANSCANADA CORP75.7409859.5154.849852.22599823.4051315.4092536615.36534986
EMA-TEMERA INC75.3954947.9242.5812.30670610.9855116.9623868916.70850767
SIA-TSIENNA SENIOR LIVING INC75.1634118.4116.9171.49171317.7253987.42728172#N/A N/A
GRT-UN-TGRANITE REAL ESTATE INVESTME75.030463.6455.317682.64395819.8495723.36220425#N/A N/A
GEI-TGIBSON ENERGY INC74.8685222.2819.599755.49553820.2355531.1882334223.16008316
CAR-UN-TCAN APARTMENT PROP REAL ESTA73.8276651.4345.561252.62686616.9586232.7068809124.03271028
BEP-UN-TBROOKFIELD RENEWABLE PARTNER73.6225140.9438.78483.71118418.21111235.828309829.86588973
ACO-X-TATCO LTD -CLASS I73.4860945.0639.614952.17532317.2065516.3168057914.40076702
TRI-TTHOMSON REUTERS CORP72.847572.7160.807892.95394111.74555179.629270549.91347049
ALA-TALTAGAS LTD72.7501117.4620.23490.0565610928.67114#N/A N/A18.41772152
BCE-TBCE INC72.0834159.3354.658750.76896799.34544816.9169330516.73624824
CHP-UN-TCHOICE PROPERTIES REIT71.9022613.712.31020.962250219.517317.536619892#N/A N/A
CNR-TCANADIAN NATL RAILWAY CO71.80426115.42110.66353.81464815.9405620.8123634618.36435959
BB-TBLACKBERRY LTD71.7656312.0512.46326.29370625.23172#N/A N/A50.99501691
POW-TPOWER CORP OF CANADA71.5963928.5627.803453.21110718.189977.6929830268.905519177
KMP-UN-TKILLAM APARTMENT REAL ESTATE70.8690618.2316.09861.84357515.078138.701454447#N/A N/A
HR-UN-TH&R REAL ESTATE INV-REIT UTS70.6525923.2120.73472.06957313.4094810.94857757#N/A N/A

Source: Bloomberg/Scott Barlow

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