The Canadian IT sector is currently our top performer. Using this Relative Strength chart, you can see that IT is outperforming every other sector. I have used the XIT.TO fund to compare the performance to other sectors.
Descartes Systems (DSG.TO) has moved to the top of the Technology sector. The SCTR ranking is 97.4 which is very strong. New highs today!
One of Canada's top IT stocks has been Constellation Software (CSU.TO). That is not new news. It continues to perform very well.
Enghouse Systems (ESL.TO) has been a strong quiet performer. Travels a bit below the radar, but while most of the markets are down, this is only a few percent off closing highs. I would probably like it better if it could push above the $55 level and start moving higher again. This 6 months of consolidation could continue to grind sideways especially with the $TSX below the 200 DMA.
The last one that looks good on the list is DH Corp. (DH.TO). The SCTR is 83.5. It is hugging the bottom of the channel and needs to accelerate from here. There is a good reason to use $40 as a stop if it can't stay inside the channel and revisit an entry in the future if it does not hold.
With the three dominant sectors in Canada below the 200 DMA the overall market is weak. In a major downtrend for the $TSX, it is important to stay in the best stocks. This IT group has been holding up in a few of these stocks. The chart shape of Descartes Systems is particularly nice with the push to new highs for the last week.
Greg Schnell, CMT