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WestJet planes are seen at the Calgary Airport on Thursday.Jeff McIntosh/The Canadian Press

The S&P/TSX Composite leapt 2.2 per cent for the trading week ending with Thursday’s close, and the benchmark is now well into the overbought, technically vulnerable range according to Relative Strength Index (RSI).

The RSI level of 72.9 is significantly above the sell signal of 70, and the RSI oversold buy signal of 30 is a distant memory. The index stands 0.60 per cent lower year-to-date.

There are seven oversold, technically attractive index constituents this week, more than I expected in the light of the strong rally.

Altus Group Ltd. is the most oversold stock in the index, followed by WestJet Airlines Ltd., Dorel Industries Class B, Air Canada, Canadian Utilities Ltd., Prometic Life Sciences Inc. and Brookfield Infrastructure Partners.

I chose WestJet as the focus stock this week. The stock is now more oversold than at any point in the past 24 months after falling 30 per cent from its mid-October peak.

RSI buy signals have been only occasionally helpful in finding profitable entry points for Westjet. An October 2016 buy signal was followed by a marginal rally before a steep drop. But the next buy signal in November presaged a reasonable 15-per-cent rally to early January 2017.

A February buy signal was by far the most successful in the past two years, as the stock would eventually rally 32 per cent to October 2017. A January 2018 buy single didn’t work at all, but another in early February of this year was followed by an 11-per-cent rally in the ensuing three weeks.

The track record for buy signals on WestJet stock is too mixed for me to completely trust the current one. The price is so deeply oversold, however, that it’s worth watching for a potential pop to the 200-day moving average. Fundamental research should always accompany technical analysis before any market transactions are implemented.

There are 26 overbought, technically vulnerable stocks in the index by RSI. Nevsun Resources Ltd is the most overbought benchmark company, followed by Great Canadian Gaming Corp., MEG Energy Corp., Canadian Apartment REIT , Alacer Gold Corp., Kirkland Lake Gold Ltd., Celestica Inc., Northland Power Inc., Imperial Oil Ltd. and Parex Resources Inc.

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OversoldRSIPrice200DMAReturn 1W %Return YTD %PE Ratio TTMPE Ratio Fwd
AIF-TALTUS GROUP LTD18.1229928.8833.1679-10.22692-21.4370698.935278120.58446187
WJA-TWESTJET AIRLINES LTD18.3311719.5925.32815-13.47173-25.255398.58035626312.36742424
DII/B-TDOREL INDUSTRIES-CL B24.4876824.730.4-11.08711-19.6235810.6972070710.10988449
AC-TAIR CANADA25.1862322.8924.7097-5.217391-11.553326.3067022947.477948383
CU-TCANADIAN UTILITIES LTD-A26.8039932.1236.92012-1.772877-12.1174315.35045537#N/A N/A
PLI-TPROMETIC LIFE SCIENCES INC28.002630.691.36415-11.53846-46.92308#N/A N/A#N/A N/A
BIP.UN-TBROOKFIELD INFRASTRUCTURE PA28.11345053.59715-2.4961-10.2868#N/A N/A#N/A N/A
OverboughtRSIPrice200DMAReturn 1W %Return YTD %PE Ratio TTMPE Ratio Fwd
NSU-TNEVSUN RESOURCES LTD88.782384.792.9853536.4672456.53595#N/A N/A87.17063192
GC-TGREAT CANADIAN GAMING CORP84.2913747.2232.89725.9239.7454928.78855848#N/A N/A
MEG-TMEG ENERGY CORP82.213678.155.43612516.5951458.56031#N/A N/A#N/A N/A
CAR.UN-TCAN APARTMENT PROP REAL ESTA80.4632940.2335.617958.1451629.06972527.95638966#N/A N/A
ASR-TALACER GOLD CORP79.555272.482.153310.7142911.210765.00603555552.45502341
KL-TKIRKLAND LAKE GOLD LTD76.7076524.9618.07017.53985429.6604120.9758863817.44069096
CLS-TCELESTICA INC76.0227715.3814.054752.39680416.6919612.026823349.980358832
NPI-TNORTHLAND POWER INC75.2735424.4923.214353.6394416.73528619.4457367620.59714045
IMO-TIMPERIAL OIL LTD75.0289741.3537.80884.8693895.89613954.6266148218.98530762
PXT-TPAREX RESOURCES INC74.4886223.2717.160555.48504128.1387712.78202896#N/A N/A
BTE-TBAYTEX ENERGY CORP74.172595.973.79334.00696858.3554437.6456628#N/A N/A
IMG-TIAMGOLD CORP74.131137.917.222459.5567877.91268826.0249096749.51874244
SU-TSUNCOR ENERGY INC74.1144150.3743.859852.87990210.1059523.2128047516.53101411
CSU-TCONSTELLATION SOFTWARE INC73.47152973.12777.78523.4133927.8892455.9018150826.50467932
TSGI-TSTARS GROUP INC/THE72.9639445.5329.70147.28086755.6581226.91884427#N/A N/A
TSX-IS&P/TSX COMPOSITE INDEX72.9184115959.515651.632.16611-0.586595117.7873306115.75600861
NVA-TNUVISTA ENERGY LTD72.598219.177.65974.68036514.3391523.59406925.12328767
VRX-TVALEANT PHARMACEUTICALS INTE72.5617225.5521.008511.71841-2.480916#N/A N/A6.015434715
CVE-TCENOVUS ENERGY INC72.4514814.0711.59738.31408823.1473942.323807832.6450116
CCO-TCAMECO CORP72.4390314.6212.189751.52777825.92593#N/A N/A44.98461538
PSI-TPASON SYSTEMS INC72.2935120.1718.149858.85051311.9202753.0789475731.515625
RRX-TRAGING RIVER EXPLORATION INC72.037517.687.16917.713885-427.8406118718.77750611
BCB-TCOTT CORPORATION71.8172620.6419.772356.61157-1.23927361.3295238244.25068164
NA-TNATIONAL BANK OF CANADA71.7207762.9961.059652.8240291.42962711.2981118910.688953
TCL.A-TTRANSCONTINENTAL INC-CL A71.4356628.726.133173.49801717.426769.17273465811.09822119
OR-TOSISKO GOLD ROYALTIES LTD71.3872813.6714.59388.492064-5.471287302.467088890.52980132
CNR-TCANADIAN NATL RAILWAY CO71.08708102.599.69314.113763-0.631288921.1687941819.16604338

Source: Bloomberg/Scott Barlow

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 28/03/24 3:08pm EDT.

SymbolName% changeLast
NPI-T
Northland Power Inc
-1.12%22.1
AIF-T
Altus Group Ltd
-1.31%51.85
CLS-T
Celestica Inc Sv
-1.38%60.94
MEG-T
Meg Energy Corp
+1.07%31.18
IMO-T
Imperial Oil
-0.02%93.27
PXT-T
Parex Resources Inc
+0.65%21.66
AC-T
Air Canada
-0.76%19.49
CU-T
Canadian Utilities Ltd Cl A NV
+0.2%30.75

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