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The S&P/TSX Composite had a strong trading week ending with Thursday’s close, returning 1.9 per cent. The benchmark’s total return is 3.8 per cent for the year.

In terms of overbought and oversold, the index is again approaching frothy territory with a Relative Strength Index (RSI) level that, at 63, is approaching the sell signal of 70.

There are only three index members trading in the technically attractive oversold range below the RSI buy signal of 30. In order, these are MAG Silver Corp., Power Financial Corp. and Corus Entertainment Inc.

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I picked Rogers Communications Inc. (RCI.B-T) for the focus chart this week largely for market strategy reasons. At the beginning of July, the telecommunications sector was the second worst performer in the TSX (next to utilities) but has enjoyed a resurgence in recent weeks. Rogers is currently overbought and technically extended, so I wanted to see whether this was cause for short-term concern.

Rogers stock has been sensitive to RSI sell signals in the past 24 months, indicating the distinct possibility of temporary price weakness. Rogers has been overbought eight times for the period, and has failed to rally through the sell signal each time. In many cases- April 2017 is a good example – the price merely moved sideways for a significant time before making its next move.

A November 2017 sell signal was the most useful for shareholders as the stock fell 18 per cent between Nov. 21, 2017 and Feb. 9, 2018.

The good news is that the stock price is now well above the 200-day moving average trend line which indicates a potentially sustainable uptrend. So even if investors should wait until the RSI levels fall below 70 before buying, the damage is likely going to be minimal unless it falls below the line.

As always, fundamental research should be completed before any market transactions.

There are 19 overbought, technically vulnerable S&P/TSX Composite companies outside of Rogers this week. Firstservice Corp is the most extended stock in the index, followed by Colliers International Group, CGI Group Inc., Restaurant Brands International, Descartes Systems Group, Thomson Reuters Corp, and Open Text Corp.

Livingston, Gillian

This week's most overbought and oversold stocks on the TSX

Oversold Stocks
TickerRSI Price ($)200D Moving AverageReturn 1Wk( %)Return YTD (%)PE Ratio TTMPE Ratio Fwd
MAG-TMAG SILVER CORP27.6213.1214.16-7.48-15.46N/AN/A
PWF-TPOWER FINANCIAL CORP28.4030.4533.66-0.88-9.3711.959.00
CJR.B-TCORUS ENTERTAINMENT INC29.254.758.75-1.25-56.044.08N/A
Overbought Stocks
NAMERSIPrice200D Moving AverageReturn 1Wk (%)Return YTD (%)PE Ratio TTMPE Ratio Fwd
FSV-TFIRSTSERVICE CORP89.49105.5989.574.3620.5250.1730.91
CIGI-TCOLLIERS INTERNATIONAL GROUP79.40107.0882.875.1641.2339.4421.67
GIB.A-TCGI GROUP INC77.6486.8772.774.0527.1921.6419.89
QSR-TRESTAURANT BRANDS INTERN75.6684.3477.096.0710.8630.4424.51
DSG-TDESCARTES SYSTEMS GRP75.2345.1537.194.6326.3388.2030.21
TRI-TTHOMSON REUTERS CORP75.1855.5853.583.873.2328.6757.02
OTEX-TOPEN TEXT CORP74.6349.7044.044.9612.0636.9413.91
RCI.B-TROGERS COMMUNICATIONS INC74.5065.5462.214.163.9717.7815.80
KL-TKIRKLAND LAKE GOLD LTD74.0929.8520.513.3255.2324.3118.84
GUD-TKNIGHT THERAPEUTICS INC73.778.578.023.383.1371.41131.85
ENF-TENBRIDGE INCOME FUND HOLDING73.3432.9829.093.2215.1014.8213.23
ALA-TALTAGAS LTD73.1528.0726.972.042.3043.7919.40
CAR-UN-TCAN APARTMENT PROP REAL ESTA72.0143.8637.400.8519.5430.48N/A
ATD.B-TALIMENTATION COUCHE-TARD71.7162.2060.1312.36-5.0218.5915.33
QBR.B-TQUEBECOR INC71.5227.9724.490.3618.4118.5015.72
T-TTELUS CORP71.4348.0046.313.203.0618.2316.72
CHP-UN-TCHOICE PROPERTIES REIT71.4112.4912.492.04-3.505.70N/A
ENGH-TENGHOUSE SYSTEMS LTD70.9080.5063.275.3431.6041.7435.78
CSU-TCONSTELLATION SOFTWARE INC70.441109.62850.078.5746.0161.7729.41
DGC-TDETOUR GOLD CORP70.3612.6012.770.08-14.7520.7716.88

Source: Scott Barlow, Bloomberg


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Scott Barlow, Globe Investor’s in-house market strategist, writes exclusively for our subscribers at Inside the Market.

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