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North American markets continue to retreat from frothy conditions, and in some cases, according to our preferred technical indicator, the selling appears to have gone too far. For more aggressive investors, there are some attractive entry points.
The usual caveats apply; investors allocating funds to stocks based solely on technicals could save time by just lighting the money on fire. But for those who have done their homework and have earmarked sectors with optimistic fundamental outlooks, technical analysis can often boost profits by signalling the right time to buy.
The two tables linked in the sidebar list members of the S&P 500 and S&P/TSX Composite indexes where the relative strength index is flashing a sub-30 buy signal (the current price earnings ratios are included for further context). For domestic investors bullish on the outlook for precious metals and base metals, there is a wealth of choices. Highlights include Franco-Nevada Corp (current RSI is 23.6), Hudbay Minerals Inc. (23.6) and Teck Resources Ltd (28.1). The energy sector is also well represented by Petrobakken Energy Ltd. (21.9), and Major Drilling Group International (26.3).
There are fewer U.S. companies in the oversold category but more sector diversification. Carnival Corp. stock (26.2) has certainly not been helped by cruise ship customers sloshing around in raw sewage but Whole Foods Market Inc. (30.53), also from the consumer discretionary sector, is an interesting topic for further study. Cable Companies Time Warner Cable (24.1) and DirecTV (27.2) were a bit of a surprise.
Again, technical analysis is only a small part of the investing picture. But technical signals can be invaluable for prepared investors and for those looking for sectors and companies to study further. Now, off to scrounge up some research reports on Whole Foods.
Scott Barlow is a contributor to ROB Insight, the business commentary service available to Globe Unlimited subscribers. Click here for more of his Insights, and follow Scott on Twitter at @SBarlow_ROB.
Scott Barlow