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

The S&P/TSX Composite rose 0.6 per cent in a volatile trading week ending with Thursday's close. According to Relative Strength index (RSI), the benchmark as a whole is in technically neutral territory with a reading of 51.6 that is roughly halfway between the buy signal of 30 and the sell signal of 70.

There are six index constituents trading at oversold, technically attractive levels by RSI. Home Capital Group Inc. is the most oversold stock in the index followed by Klondike Mines Ltd., Turquoise Hill Resources Ltd., Valeant Pharmaceuticals International Inc., Cenovus Energy Inc., and Capital Power Corp.

Capital Power is the focus chart this week. The stock is oversold after the company purchased two Ontario power plants from Veresen Inc. We'll take a close look at the technical but fundamental analysis will be required to assess whether the acquisitions have changed the profit outlook for Capital Power to the extent that the stock's technical track record is less relevant.

Capital Power stock shows a trend we've seen in the past – RSI buy signals have not been effective when the stock was trading below its 200-day moving average trend line. Buy signals in June, July, August and November of 2015 were no help at all, as the stock barely paused before continuing on its path lower.

Before now, Capital Power has not been oversold when the price was above the trend line. Investors can hold some hope that the stock will bounce because it remains above the 200-day, but there's not enough previous buy signals during the period to be really confident it. Capital Power's strong indicated dividend yield of xx per cent should help, but I don't think the stock warrants buying on technical grounds alone.

There are 28 overbought, technically vulnerable S&P/TSX Composite stocks according to RSI. This is a big list and makes me worry a bit about market froth and short term performance for the benchmark.

Canadian Tire Corporation Ltd. is the most overbought stock in the index followed by Rogers Communications Inc., Dollarama Inc., TMX Group Ltd., Veresen Inc. and Canadian Apartment REIT.

As always, fundamental analysis should be completed before any buy or sell transactions.

Follow Scott Barlow on Twitter @SBarlow_ROB.

RSIPrice200DMAReturn 1W %Return YTD %PE Ratio TTMPE Ratio FWD
HCG-THOME CAPITAL GROUP INC14.5073319.6828.0387-18.3871-42.944364.9834670214.830633284
KDX-TKLONDEX MINES LTD21.803324.86.5143-4.98008-23.6825.0672859827.1476788
TRQ-TTURQUOISE HILL RESOURCES LTD23.662123.634.2974-5.699477-15.5452426.77050241#N/A N/A
VRX-TVALEANT PHARMACEUTICALS INTE26.5463612.0624.6778-5.221525-38.46944#N/A N/A2.395527917
CVE-TCENOVUS ENERGY INC28.6078613.8118.5653-2.875174-31.56164#N/A N/A63.93518519
CPX-TCAPITAL POWER CORP29.9324324.422.742-1.0957736.47383519.2039336718.85625966
RSIPrice200DMAReturn 1W %Return YTD %PE Ratio TTMPE Ratio FWD
CTC.A-TCANADIAN TIRE CORP-CLASS A84.58778166.63141.92142.2398120.180918.2917048616.46053541
RCI.B-TROGERS COMMUNICATIONS INC-B83.6339162.3655.05053.45969221.7133221.2444276318.54296759
DOL-TDOLLARAMA INC83.00589118.73100.54981.80464321.1943131.9345234327.68889925
X-TTMX GROUP LTD81.2912575.1664.92653.1649975.49530218.8131222415.70413707
VSN-TVERESEN INC81.2723216.0312.97594.25114223.7831976.989950935.15350877
CAR.UN-TCAN APARTMENT PROP REAL ESTA79.8639934.631.2691.46842911.2113121.59503593#N/A N/A
AAR.UN-TPURE INDUSTRIAL REAL ESTATE78.322596.585.59973.79746518.9132417.15306089#N/A N/A
GRT.UN-TGRANITE REAL ESTATE INVESTME78.039549.3243.20462.24439311.3191419.71722639#N/A N/A
ZZZ-TSLEEP COUNTRY CANADA HOLDING77.7936935.7929.997352.5795424.9789827.3857937622.97175866
BB-TBLACKBERRY LTD76.879512.269.802456.42360932.68399#N/A N/A605.5666808
AYA-TAMAYA INC76.7140423.6819.886255.92164725.1446619.377993398.554188146
CCA-TCOGECO COMMUNICATIONS INC76.2513176.3466.627951.43904817.0596413.3249334812.83888328
NVU.UN-TNORTHVIEW APARTMENT REAL EST75.8888422.9720.93070.883005616.034214.06193331#N/A N/A
IFP-TINTERFOR CORP75.72919.7515.38271.28139431.470422.1667523414.89441931
DOO-TBRP INC/CA- SUB VOTING75.3288632.8525.783950.799994815.5555511.9028159414.73755047
AX-U-TARTIS REAL ESTATE INVESTMENT74.5719613.7512.677952.23379910.4033810.99672737#N/A N/A
PBH-TPREMIUM BRANDS HOLDINGS CORP74.1530386.6866.99271.94483926.0538941.6099020426.89419795
BCE-TBCE INC73.2216661.1859.717650.64070876.8772117.565312317.93608912
GIL-TGILDAN ACTIVEWEAR INC73.1693737.2535.93023.94443910.1684618.2829422316.5459989
BCB-TCOTT CORPORATION72.8555917.2517.12082.55041714.30642107.674126972.20688226
CCL.B-TCCL INDUSTRIES INC - CL B72.37313302.73253.79212.19549814.5600528.9521601323.51300971
CRR.UN-TCROMBIE REAL ESTATE INVESTME72.215414.6914.18680.41095539.7075722.09743568#N/A N/A
BEP.UN-TBROOKFIELD RENEWABLE PARTNER72.1409241.6939.468751.193675.857106#N/A N/A461.0200918
CGX-TCINEPLEX INC72.1058752.0850.999452.2526972.722842.6598880229.22558923
ECI-TENERCARE INC71.3048121.2118.719951.44369220.0777928.6408351128.46979866
AIF-TALTUS GROUP LTD71.0392831.4528.57333.1506432.03586557.4879691425.11980831
QSR-TRESTAURANT BRANDS INTERN71.0157876.664.17142.17973419.875537.6873808631.16603717
NFI-TNEW FLYER INDUSTRIES INC70.8712650.2542.2020.562924723.0731817.8224346516.20126039

Source: Bloomberg/Scott Barlow

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