Canada Market Round-Up

Last week, the benchmark S&P/TSX Composite Index (TSX: ^TSX) opened on a positive note and maintained a bullish momentum for the entire week. The S&P/TSX composite index advanced by 109.16 points (0.55%) to 20138.35 for the week ending June 11, 2021, registering the fourth straight week of gains. The benchmark index made a fresh all-time high of 20163.49 on June 14, 2021, and closed in the green, up by 19.30 points. The buying was seen in Technology, Utilities, Industrials and Energy stocks, while the profit booking was seen in Healthcare, Basic Materials, Consumer Cyclicals and Real Estate stocks on Monday. The weekly chart indicates that the index prices are continuously trading above the rising trendline and taking support of it. The immediate resistance level for the index is 20650, while the immediate support exists at 19760. On the weekly chart, RSI is trading in the oversold territory at (~74.55 levels), which indicates the possibilities of a correction in the index.

The upcoming major economic events that may impact the Canadian market sentiment include House Starts Annualized, CPI BoC Core YY and Wholesale Trade MM.

Global Markets Wrap-Up 

The S&P 500 index hit a new all-time high on Monday. For the week ending June 11, 2021, S&P 500 closed at 4247.44, up by ~0.41%. However, Dow Jones Industrial Average settled at 34479.60 with an overall loss of ~0.8%, while the Nasdaq composite added 254.93 points and closed at 14069.42 (up ~1.85%). Russell 2000 settled at 2335.81, reflecting an increase of ~2.16%. Last week, the major global indices reacted positively to the data published by the US Labor Department. The US claims for jobless benefits were declined to 376,000 compared with 385,000 in the prior week.

Having understood the US market’s performance over the past one week, taking cues from major global news, and based on our technical analysis of the S&P/TSX Composite Index, now let us look at the two TSX listed stocks from the technical standpoint. Noted below are our recommendations based on generic insights, entry price, target prices, and stop-loss for Crescent Point Energy Corp. (TSX: CPG) and Organigram Holdings Inc. (TSX: OGI) for the next 2-4 weeks duration.

Crescent Point Energy Corp. 

Crescent Point Energy Corp. (TSX: CPG) is a Canada-based oil and gas company. It operates in the business of oil and gas exploration, development, and production.

Price Action Analysis (on the Weekly Chart)

On the weekly chart, CPG stock price broke out the downward sloping trendline resistance at CAD 5.45 level on June 02, 2021. Since the breakout, prices are sustaining above the downward sloping trendline. Furthermore, stock prices are moving in higher peaks and higher troughs, which indicates bulls are in action. Now, the next resistance level appears to be at CAD 6.41, and the stock may test that level in the short term (2-4 weeks).

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, the momentum oscillator RSI (14-Period) is trading at ~63.88 level, which supports the further upside move in the stock price. Volumes are also supporting the current price action. Furthermore, the stock is trading above 21-period and 50-period SMA, indicating a bullish trend.

Financial Summary:

General Recommendation:

As per the above-mentioned price action and technical analysis, we can conclude that Crescent Point Energy Corp. is looking technically well-placed on the chart, and we recommend a ‘Buy’ rating on the stock. Investment decision should be made depending on the investor’s appetite for upside potential, risks, and any previous holdings. This recommendation is purely based on technical analysis, and fundamental analysis has not been considered in this report. Below is the summary of our recommendation.

Organigram Holdings Inc. 

Organigram Holdings Inc. (TSX: OGI) is a Canada-based cannabis company. The Company is a licensed producer of cannabis and extract-based products. It is focused on producing indoor-grown cannabis for patients and adult recreational consumers in Canada.

Price Action Analysis (on the Weekly Chart)

On the weekly chart, OGI stock price witnessed a breakout of the rectangle channel pattern at CAD 3.16 level (on February 08, 2021). Prices registered a decisive break out of the sideways consolidation pattern that suggests a change in the trend from sideways to upward. Prices have retested the breakout level (on May 19, 2021) and bounced from that level. Now, the next resistance level appears to be at CAD 4.40, and the stock may test that level in the short term (2-4 weeks).

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, the momentum oscillator RSI (14-Period) is trading at ~55.25 levels, indicating bullish momentum. Moreover, the stock is trading above 21-period and 50-period SMA, which may act as a crucial support level for the prices. The weekly volumes also seem supportive of the upside movement.

Financial Summary:

General Recommendation:

As per the above-mentioned price action and technical analysis, we can conclude that Organigram Holdings Inc. is looking technically well-placed on the chart, and we recommend a ‘Buy’ rating on the stock. Investment decision should be made depending on the investor’s appetite for upside potential, risks, and any previous holdings. This recommendation is purely based on technical analysis, and fundamental analysis has not been considered in this report. Below is the summary of our recommendation.

Upcoming Major Global Economic Events

Market events occur on a day-to-day basis depending on the frequency of the data and generally include update on employment, inflation, GDP, consumer sentiments, etc. Noted below are the upcoming week's major global economic events that could impact the S&P/TSX Composite Index and listed stocks’ prices.

Investment Related Risks: Based on the technical analysis, the risks are defined as per risk-reward ratio (~0.60:1.00); however, returns are generated within 2-4 weeks’ time frame. This may be looked at by Investors with sufficient risk appetite looking for returns within a short investment duration. Investment recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, and social and political instability risks etc.

Entry Price: For the given recommendation(s), the Entry Price is assumed to be at or above a certain level. However, a slight deviation on either side in the ‘Entry Price’ can be considered depending upon the potential expected or indicated.

Note: How to Read the Charts?

The Green color line reflects the 21-period moving average, while the Red color line indicates the 50-period moving average. SMA helps to identify existing price trend. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The Black color line in the chart’s lower segment reflects the Relative Strength Index (14-Period), which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status, while a reading of 30 or below suggests an oversold status.

The Blue color bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume, and we consider stocks with greater than or equal to 200,000 volumes as more liquid. Liquidity in stocks helps in easier and faster execution of the order.

The Orange color lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

Risk Reward Ratio: The risk reward ratio is the difference between an entry point to a stop loss and profit level. We suggest ~60% Stop Loss of the Target 1 from the entry point.

A trailing stop-loss is a modification of stop-loss in case of favourable movement in the price to protect the gains. We suggest Investors to Trail the Stop-Loss as per the aforementioned levels if the stock price achieves more than 50% of the Target 1. Investors should consider exiting from the position as per the Trailing Stop-Loss level if the price starts moving downwards after achieving more than 50% of the Target 1.

The reference date for all price data, volumes, technical indicators, support, and resistance levels is June 14, 2021. The reference data in this report has been partly sourced from REFINITIV. 

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

CAD: Canadian Dollar

RSI: Relative Strength Index 

Note: Trading decisions require a thorough analysis by investors. Technical reports in general chart out metrics that may be assessed by investors before any stock evaluation. The above are illustrative analytical factors used for evaluating the stocks; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.

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Disclaimer

The advice given by Kalkine Canada Advisory Services Inc. and provided on this website is general information only and it does not take into account your investment objectives, financial situation and the particular needs of any particular person. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. The website www.kalkine.ca is published by Kalkine Canada Advisory Services Inc. The link to our Terms & Conditions has been provided please go through them. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations later.