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

The S&P/TSX Composite eased higher by 0.4 per cent for the trading week ending with Thursday's close and stands a minuscule 0.5 per cent higher for the year so far. The benchmarks' Relative Strength Index (RSI) reading of 43 puts the equity market in neutral technical territory, although closer to the RSI buy signal of 30 than the overbought sell signal of 70.

There are 14 oversold, technically attractive benchmark constituents this week led by Oceangold Corp. and Uni-Select Inc. The energy sector is represented by Tahoe Resources Inc. and Crescent Point Energy Corp.

Dividend stocks also feature heavily in this week's oversold list. CanREIT, BCE Inc., Algonquin Power, Shaw Communications Inc. , Crombie REIT and Emera Inc. are all there as a sign rising bond yields are starting to bite income investors.

I picked Emera as the focus stock this week, in large part to take the technical temperature for dividend sector stocks as a whole.

The past two years has seen Emera stock rangebound between $40 and $50. RSI Buy signals have worked reasonably well – signalling a small rally in October, 2016, and a more profitable upsurge in December, 2016. The current stock price near $47 is close to testing the 200-day moving average of $46.43.

The 200-day moving average matters most here. RSI buy signals are not that exciting as long as the stock remains stuck in its current range. The only exception might be the adventurous souls trying to trade the range – buying near $40 to see if they can sell it near $50.

If bond yields keep rising, I'd expect more and more income-oriented stocks to fall below their 200-day moving averages, which implies a sustained downtrend. This is the most important takeaway from this week's chart in my opinion.

There are six S&P/TSX composite stocks trading above the sell signal this week, led by Air Canada and WestJet Airlines Ltd., who are benefitting from weaker fuel prices. They are joined by Western Forest Products Inc., Linamar Corp., Great-West Lifeco Inc. and First Quantum Minerals Ltd.

TSX Overbought and Oversold Stocks

Oversold
NameRSIPrice200D Moving AverageReturn 1 Wk %Return YTD %PE Ratio TTMPE Ratio FWD
OGC-TOCEANAGOLD CORP.21.013.574.09-6.47-10.9511.379.37
UNS-TUNI-SELECT INC.21.5828.0231.63-4.31-4.7115.9314.8
THO-TTAHOE RESOURCES INC.21.666.9412.25-3.48-44.389.1621.69
REF.UN-TCAN REAL ESTATE INVEST TRUST22.5844.8547.35-1.64-2.0212.75N/A
PLI-TPROMETIC LIFE SCIENCES INC.23.841.512.25-9.09-32.74N/AN/A
CPG-TCRESCENT POINT ENERGY CORP.25.819.2914.8-1.91-48.79N/A78.07
BCE-TBCE INC.26.3457.8959.25-1.051.9716.5117.1
AQN-TALGONQUIN POWER & UTILITIES26.561312.24-1.9715.9829.37N/A
ELD-TELDORADO GOLD CORP.27.123.114.3-7.55-28.81146.0728.49
SJR.B-TSHAW COMMUNICATIONS INC.27.6527.6527.71-0.474.8420.3121.94
EMA-TEMERA INC.28.6347.1946.44-1.125.7119.7N/A
SPB-TSUPERIOR PLUS CORP.28.9511.0312.29-2.48-11.2950.3915.45
CRR.UN-TCROMBIE REIT29.6913.5913.89-2.12.920.5N/A
RBA-TRITCHIE BROS AUCTIONEERS29.7834.8644.07-7.57-22.7425.2525.69
Overbought
NameRSIPrice200D Moving AverageReturn 1 Wk %Return YTD %PE Ratio TTMPE Ratio FWD
AC-TAIR CANADA85.3420.7714.38.5452.456.655.68
WJA-TWESTJET AIRLINES LTD.81.2425.1722.533.9610.8711.6811.3
WEF-TWESTERN FOREST PRODUCTS INC.78.042.492.069.0935.8410.54N/A
LNR-TLINAMAR CORP.73.8467.5258.326.818.057.898.18
GWO-TGREAT-WEST LIFECO INC.73.1835.7735.261.414.213.2112.59
FM-TFIRST QUANTUM MINERALS LTD.71.9312.8713.4813.17-3.4155.9725.67

Source: Bloomberg, Scott Barlow

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