Building on our prior teaching on the SIA Sector Scopes, today we have taken a snapshot of the current readings to illustrate how utilizing this powerful tool might guide the advisor's decisions. In the attached sector scope, we find the SIA Energy Sector all the way to the right-hand side of the bell curve and isolated off on its own, which to an untrained eye might appear overbought and primed to follow suit with the remainder of the sectors on the left-hand side of the bell curve.
However, this is not always the case. Recall that in the SIA sector scope we are able to ascertain three important pieces of data. First, we have the level, which in this case is 87–100%. This provides a quick snapshot of the data aggregated by the platform and reflects the percentage of stocks in the energy sector currently on a point-and-figure buy signal (double top). Taken on its own, this is a notably bullish reading—especially given that most other sectors have relatively low bullish readings, below 50%. Secondly, recall that the capital letters indicates that the Bullish Percent for the energy sector is rising. In this context, the uppercase letters signify that the number of stocks experiencing double tops is increasing—another bullish signal. Finally, the color of the block (yellow) shows that the sector’s relative strength, as reported in the SIA sector report, is neutral. To a casual observer, this might suggest that better opportunities exist elsewhere—and that may very well be the case. But if you look at the clipping also attached to the bell curve, you might notice that this sector's relative strength is rising up from the red (unfavored) zone where it had been for a very long time. So, while still neutral within the sector report, the SIA platform is picking up on a growing relative strength position. Taken together, the position for energy within the SIA platform might actually be construed as a very constructive sector and one to be on the lookout within for new investment ideas.
Having scanned the energy complex for new ideas, today we are presenting ARC Resources Ltd. (ARX.TO), which itself is building relative strength within the SIA TSX Capped Composite Index Report and now sits in position #53 of 200 Canadian stocks. In doing so, shares of ARX.TO have grown by 8.99% over the past month and 11.71% over the past quarter, outperforming the SIA S&P/TSX Composite Index benchmark of -1.87% and 0.77% over the same timeframes.
Turning next to the attached SIA point-and-figure chart, which has been scaled at 2% for an investment-grade technical analysis, we find a recent triple top breakout past resistance at $27.49 to current levels at $28.93. On the chart, we may experience support at $26.95 and further support at $25.39, while resistance might be extrapolated at $30.95 and $33.51 based on a point-and-figure vertical count from prior consolidation ranges. Meanwhile, shares of ARX.TO carry a perfect SMAX score of 10 out of 10, which may further support ARX.TO in the near term, given the relative strength that this represents against a basket of other asset classes.
Disclaimer: SIACharts Inc. specifically represents that it does not give investment advice or advocate the purchase or sale of any security or investment whatsoever. This information has been prepared without regard to any particular investors investment objectives, financial situation, and needs. None of the information contained in this document constitutes an offer to sell or the solicitation of an offer to buy any security or other investment or an offer to provide investment services of any kind. As such, advisors and their clients should not act on any recommendation (express or implied) or information in this report without obtaining specific advice in relation to their accounts and should not rely on information herein as the primary basis for their investment decisions. Information contained herein is based on data obtained from recognized statistical services, issuer reports or communications, or other sources, believed to be reliable. SIACharts Inc. nor its third party content providers make any representations or warranties or take any responsibility as to the accuracy or completeness of any recommendation or information contained herein and shall not be liable for any errors, inaccuracies or delays in content, or for any actions taken in reliance thereon. Any statements nonfactual in nature constitute only current opinions, which are subject to change without notice.
