The S&P/TSX Composite jumped 2.3 per cent for the trading week ending with Thursday's close, but it remains 4.7 per cent lower for the year.
In terms of technical, Relative Strength Index (RSI) puts the benchmark as a whole at the low end of the neutral range with a reading of 37 that's much closer to the oversold, buy signal of 30 than the overbought RSI sell signal of 70.
There are 21 oversold, technically attractive benchmark constituents by RSI this week, led by Element Fleet Management Corp. IGM Financial Inc is the second most oversold TSX company followed by Transalta Renewables Inc., Nutrien Ltd, Crew Energy Inc. and Emera Inc.
I chose Manulife Financial for the focus chart this week because of its prominence in the Canadian market. The stock is not officially oversold with an RSI of 31 at present, but spent much of the early part of February with readings well below the RSI buy signal of 30.
Manulife's price has responded well to buy signal in the past three years although the rallies were not huge in some cases. An Aug. 24, 2015 buy signal forecast a 9.4-per-cent rally to Nov. 3 of the same year, although a major slide followed immediately afterwards.
Another buy signal in February 2016 turned out to be a profitable entry point for investors as it marked the three-year low for the stock price. A June 2016 RSI buy signal offered another lucrative opportunity as Manulife rose 55 per cent by Jan. 26, 2016. A Sept. 5, 2017 buy signal was also followed by a rally, but it was smaller in size and the price is now revisiting the lows of that period.
Manulife's price has also been sensitive to its 200-day moving average trend line, both as resistance – the period between October and December 2015 is a good example – and support (September 2017).
RSI buy signals have been effective as finding buying opportunities for Manulife but there has been a tendency for the stock to roll over and re-test previous lows.
Fundamental research will be important as always, as potentially uncovering the profit outlook for Manulife that will determine whether the stock can sustain a technical recovery.
There are only seven overbought, technically vulnerable stocks according to RSI this week. CanREIT tops the list, followed by Kinder Morgan Canada Ltd., Stars Group Inc., Pure Industrial REIT, Colliers International Group, First Quantum Minerals Ltd., and CGI Group Inc.
| | RSI | Price | 200DMA | Return 1W % | Return YTD % | PE Ratio TTM | PE Ratio Fwd |
EFN-T | ELEMENT FLEET MANAGEMENT COR | 9.517792 | 4.65 | 9.34785 | -14.6789 | -51.05263 | #N/A N/A | 6.175298805 |
IGM-T | IGM FINANCIAL INC | 15.56448 | 39.11 | 42.2462 | -5.187877 | -11.41563 | 12.93636263 | 11.86229906 |
RNW-T | TRANSALTA RENEWABLES INC | 20.05744 | 11.61 | 14.1273 | -2.682313 | -12.74312 | 30.72379455 | 10.99431818 |
NTR-T | NUTRIEN LTD | 20.35491 | 55.68 | #N/A N/A | -2.040816 | #N/A N/A | #N/A N/A | 20.28986207 |
CR-T | CREW ENERGY INC | 20.43678 | 1.78 | 3.73275 | -6.315791 | -43.49207 | #N/A N/A | #N/A N/A |
EMA-T | EMERA INC | 21.06839 | 40.36 | 47.277 | -5.876864 | -13.02432 | 40.84065427 | 14.58092486 |
KDX-T | KLONDEX MINES LTD | 25.36732 | 1.96 | 3.80725 | -7.547168 | -39.8773 | #N/A N/A | 18.629407 |
ALA-T | ALTAGAS LTD | 26.72829 | 26.1 | 28.9635 | 0.5005791 | -8.229344 | 26.69959314 | 31.82926829 |
EXE-T | EXTENDICARE INC | 26.78408 | 8.28 | 9.463775 | -1.779363 | -9.089741 | 21.51163326 | #N/A N/A |
IMO-T | IMPERIAL OIL LTD | 27.33633 | 34.19 | 38.41555 | -2.62034 | -12.84731 | 97.80894964 | 17.63280041 |
IFC-T | INTACT FINANCIAL CORP | 27.50903 | 97.63 | 100.3324 | -0.3267001 | -7.010194 | 15.85698749 | 14.54558999 |
SJR.B-T | SHAW COMMUNICATIONS INC-B | 27.75526 | 25.65 | 28.22575 | 0.2300417 | -9.924901 | 18.9846011 | #N/A N/A |
FRU-T | FREEHOLD ROYALTIES LTD | 27.90746 | 12.7 | 14.04875 | 0.3159543 | -9.275241 | 34.88838412 | 97.69230769 |
GWO-T | GREAT-WEST LIFECO INC | 28.11499 | 33.84 | 35.0156 | -0.02954165 | -3.589743 | 13.11410361 | 11.09508197 |
CVE-T | CENOVUS ENERGY INC | 28.40099 | 9.36 | 11.47855 | -4.974623 | -18.4669 | 8.351564898 | 23.45864662 |
SW-T | SIERRA WIRELESS INC | 28.72452 | 20.32 | 30.07025 | -11.95841 | -20.93385 | 36.02376037 | 17.69198708 |
ECI-T | ENERCARE INC | 28.77679 | 18.43 | 20.1114 | -0.8045536 | -9.375939 | 30.88255798 | 24.25 |
RRX-T | RAGING RIVER EXPLORATION INC | 28.79576 | 6.39 | 7.6214 | 0.6299213 | -20.125 | 24.91946942 | 18.41498559 |
NWC-T | NORTH WEST CO INC/THE | 29.09249 | 27.41 | 30.8906 | 0.07301935 | -8.846025 | 20.17987391 | 15.11025358 |
ENF-T | ENBRIDGE INCOME FUND HOLDING | 29.58691 | 27.07 | 30.8839 | 0.6319692 | -8.580424 | 12.70892004 | 11.31216047 |
PSK-T | PRAIRIESKY ROYALTY LTD | 29.68907 | 29.07 | 30.7639 | 0.8674532 | -9.143747 | 70.83367778 | 99.21501706 |
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| NAME | RSI | Price | 200DMA | Return 1W % | Return YTD % | PE Ratio TTM | PE Ratio Fwd |
REF.UN-T | CAN REAL ESTATE INVEST TRUST | 78.13067 | 50.49 | 46.3198 | 18.10526 | 9.432937 | 13.29826856 | #N/A N/A |
KML-T | KINDER MORGAN CANADA LTD | 73.90696 | 19.12 | #N/A N/A | 10.39261 | 13.49172 | #N/A N/A | 28.28402367 |
TSGI-T | STARS GROUP INC/THE | 73.30263 | 33.35 | 25.88705 | 4.47995 | 14.01709 | 20.46193404 | 11.26819521 |
AAR.UN-T | PURE INDUSTRIAL REAL ESTATE | 73.1832 | 8.06 | 6.8487 | 0.2487614 | 19.43823 | 21.32918504 | #N/A N/A |
CIGI-T | COLLIERS INTERNATIONAL GROUP | 72.46965 | 83.8 | 70.955 | 15.28409 | 10.45209 | 34.28343995 | 19.56321186 |
FM-T | FIRST QUANTUM MINERALS LTD | 71.0187 | 21.39 | 14.55025 | 25.01461 | 21.46507 | #N/A N/A | 18.01460288 |
GIB.A-T | CGI GROUP INC - CLASS A | 70.44406 | 73.63 | 66.6254 | 6.52488 | 7.803802 | 18.98852443 | 17.33286252 |
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Source: Bloomberg/Scott Barlow