The S&P/TSX Composite fell 1.1 per cent for the trading week ending with Thursday’s close, and the benchmark’s total return sits at negative 6.4 per cent for 2018.
The benchmark is not yet oversold, according to Relative Strength Index (RSI , with a reading of 38 that is closer to the RSI buy signal of 30 than the overbought sell signal of 70, but still in neutral territory.
There are 24 oversold index member stocks trading below the RSI buy signal.
Bank of Montreal is the most oversold stock in the benchmark, followed by Peyto Exploration & Development Corp., Power Financial Corp., Great-West Lifeco Inc., Russell Metals Inc., Power Corp of Canada, Superior Plus Corp and Exchange Income Corp.
I chose Brookfield Property Partners as the focus chart this week, with some hope that the trust’s hefty 7.6-per-cent indicated distribution yield will help motivate a bounce in the price.
The unit price has been sensitive to RSI buys signals over the past 24 months although rallies have been brief in some cases. A buy signal in August 2017 was followed quickly by a marginal jump higher, but only temporarily before selling pressure resumed. A September 2017 buy signal forecast a 9.1-per-cent rally before the end of October although again, the price weakened afterwards.
A series of RSI buy signals in March and April 2018 made up the most successful indicator on the chart as a significant 15.7-per-cent rally occurred, and that figure does not include the distribution payments.
As an entry point, the current buy signal would be more interesting if the price makes a base by moving sideways for a few trading sessions. Fundamental research is important as always before any market transaction, in this case to ensure the sustainability of the distribution yield.
There are seven overbought, technically vulnerable S&P/TSX Composite companies by RSI this week led by Kirkland Lake Gold Ltd and Metro Inc. Empire Co., Tahoe Resources Inc., Sandstorm Gold Ltd., Franco-Nevada Corp. and Northland Power complete the list.
Scott Barlow