Conditions are getting frothy in the Canadian equity market.
The S&P/TSX Composite was up 1.5 per cent for the trading week ending with Thursday’s close. The benchmark’s Relative Strength Index (RSI) reading of 79 is well above the 70 sell signal, indicating overbought markets vulnerable to a correction in the short term.
There are only two technically attractive index members trading at oversold levels below the RSI buy signal of 30. Bombardier Inc. is the most oversold company after getting walloped by 35 per cent this week. Cogeco Communications Inc is the other oversold stock after dropping 8.4 per cent.
The list of overbought, technically vulnerable benchmark companies is long at 42 members. Ballard Power Systems Inc. is the most overbought TSX stock, followed closely by ONEX Corp., Genworth MI Canada Inc., Aritzia Inc. and Element Fleet Management Corp. Other prominent overbought names include Shopify Inc., Brookfield Asset Management Inc. and Bank of Montreal.
The list of S&P/TSX Composite stocks showing strong price momentum by hitting new 52-week highs is unsurprisingly big this week at 34 members.
They are ranked by market capitalization below. The largest company making new highs is Enbridge Inc., followed by Brookfield Asset Management Inc., Shopify Inc., Thomson Reuters Corp., Sun Life Financial Inc., CGI Inc. and Franco-Nevada Inc.
Stocks with downward price momentum – those hitting 52-week lows – are Bombardier Inc. and Shawcor Ltd.