The most oversold and overbought stocks on the TSX

This is not a bearish setup yet; a 57 RSI in the context of a strong YTD advance usually means trend persistence still dominates mean reversion. The market is only modestly off its highs, so the immediate edge is on buying shallow pullbacks rather than pressing shorts, especially in a tape where passive flows and systematic trend-following still have room to support Canadian beta.

The more actionable read is that the TSX is in a late-stage uptrend where upside becomes increasingly dependent on earnings revisions and commodity support, not multiple expansion. That favors sectors with visible cash flow and buyback capacity—Canadian banks, integrated energy, and select miners—while rate-sensitive REITs and utilities are more exposed if rates stop falling or if positioning unwinds. Over the next 1-3 months, a break back toward an RSI near 50 would likely attract dip buyers; a failed hold there would be the first real signal that momentum is rolling over.

The contrarian mistake is to treat a neutral RSI as a sell signal simply because the index has had a good year. In strong trend regimes, RSI often stays between 50 and 70 for long stretches; the real risk is not overboughtness but an exogenous shock that tightens financial conditions or hits commodities. Over 6-18 months, the trade becomes less about index direction and more about whether the TSX’s cyclical exposure can keep earning upgrades without a growth scare.