Towards the end of the market gloom in 2018, Stockhead reported on a selection of ASX small caps that appeared to have been oversold because of the market, and not because of company fundamentals.

Now the market has a month of gains under its belt — the Small Ords regained 7.7 per cent, or about half of what it lost in the prior year — it’s worth looking at which stocks might have been overbought.

A metric called the Relative Strength Index (RSI) combines average gains and losses during a specific period and measures their momentum one way or the other.

It is a trend indicator used in technical analysis of stocks.

Traditionally, an RSI at or above 70 has been used to suggest a stock has been overbought whereas an RSI at or below 30 may indicate a stock has been oversold.

Imperial Pacific (ASX: IPC) has an RSI of 100 for the last two weeks but has only had one trade in the last two weeks, and it was a purchase.

Stocks with no selling activity are more likely to have been overbought if there has not been any news out of the company or bad news has not fully disappeared.

And it doesn’t measure price gains or losses: Golden Cross Resources (ASX: GCR) only has an RSI of 53 over the last two weeks despite its shares gaining 185 per cent, as investors have bought and sold in equal numbers, although clearly the purchase price was in the ascendance.

Stockhead has found 24 stocks have a 14-day RSI of 70 or more in the weeks up to January 22, suggesting they have been overbought.

Ticker Name RSI 14D Market Cap Price Jan 22
IPC IMPERIAL PACIFIC LTD 100 $3.5m 1.14
MCM MC MINING LTD 88 $145.1m 1.05
OPT OPTHEA LTD 83 $190.8m 0.765
MRG MURRAY RIVER ORGANICS GROUP 78 $56.4m 0.14
PNR PANTORO LTD 77 $223.5m 0.26
CDX CARDIEX LTD 76 $31.6m 0.05
RGP REFRESH GROUP LIMITED 76 $20.1m 0.074
RED RED 5 LTD 76 $127.4m 0.1025
EOL ENERGY ONE LTD 76 $24.7m 1.1
CYP CYNATA THERAPEUTICS LTD 75 $136.5m 1.355
ACW ACTINOGEN MEDICAL LTD 75 $64.8m 0.058
VRC VOLT RESOURCES LTD 74 $36.4m 0.025
SDG SUNLAND GROUP LTD 73 $234.3m 1.54
GSW GETSWIFT LTD 73 $105.6m 0.52
BYE BYRON ENERGY LTD 73 $186.5m 0.27
TGA THORN GROUP LTD 72 $99.5m 0.6
WSI WESTSTAR INDUSTRIAL LTD 72 $10.9m 0.02
VTG VITA GROUP LTD 72 $196.2m 1.24
GCM GARDA CAPITAL GROUP 72 $39.8m 1.58
MWY MIDWAY LTD 72 $308.1m 3.53
AVH AVITA MEDICAL LTD 71 $223.7m 0.12
PGM PLATINA RESOURCES LTD 71 $20.9m 0.077
BKT BLACK ROCK MINING LTD 71 $27.4m 0.055
Z1P ZIP CO LTD 71 $368.4m 1.16

The company with the second highest RSI is MC Mining (ASX:MCM).

Having had their mining license for their coking coal project granted in December, they completed the purchase of the properties and chief David Brown promised the transaction would lead to the start of the project.

The company with the third highest RSI, Opthea (ASX:OPT) has had no news since early December.

The biotech is trialling treatments for eye diseases, including some which lead to blindness.

Dried fruit producer Murray River Organics Group (ASX:MRG) said this week dried fruit prices were increasing by 25 per cent, but much of the buying came before that was announced.

After recapitalising and resetting its strategy come November, several small cap funds started buying into the company.

Among other noteworthy stocks with was ‘buy now pay later’ provider Zip Co (ASX:Z1P).

On January 7 it said it had met its pre-tax break even point.

Logistics software provider GetSwift (ASX:GSW) was sitting at 73 yet its most recent news was in December when the class action that would be allowed to proceed was chosen by the Federal Court.