Each week, Stockhead recaps ASX stocks that are “running hot” as deduced by the Relative Strength Index (RSI).

The RSI is a technical gauge which measures how trading momentum is affecting the price action.

A reading of 70 is seen as the level at which a company may have been overbought. If a stock has a reading of 30 or below, it could be undervalued.

Click here for a more detailed rundown of what the RSI does and how it’s used.

While there’s usually a pretty good reason if a given stock is running hot (or cold), investors are also on the lookout for opportunities where the price action has separated from fundamentals.
 

Running Hot

Here’s a summary of the stocks that were running hot for the two weeks ended Friday, December 10:

Biotech play Neuren Pharmaceuticals (ASX:NEU) comfortably led the Running Hot list, and with good reason.

Investors piled into the stock after its North American research partner, Acadia Pharma (Nasdaq: ACAD) reported positive top-line results from the Phase 3 ‘Lavender’ trial of trofinetide, Neuren’s lead drug candidate.

Strong results for Phase 3 trials — typically used to test efficacy after safety protocols have been cleared in earlier trials — are often enough to get the market talking.

Stockhead caught up with Nueren CEO Jon Pilcher to discuss the company’s outlook last week following its Phase 3 update.

And on Twitter, investors flagged the increased buying activity from large investment banks in the wake of the results.

New Zealand pay-TV and communications company Sky Networks (ASX:SKT) also ran hot after providing an investor update last week, where it flagged major cost savings that will flow through to its bottom line in FY22.

SKT said following a board review, it had identified ~$35m of cost savings, comprising $26m in annual costs and $9m in one-off costs.

“As a result, EBITDA guidance increases from $115m-$130m to $150m-$160m and NPAT guidance increases from $17.5m–$27.5m to $40m-$48m,” SKT said.

Another biotech, Argenica Therapeutics (ASX:AGN), also made an appearance on the Running Hot list after getting a US patent approval related to the use of its lead drug, ARG-007.

The company’s focus is on the development of new therapeutics aimed at reducing brain tissue death after strokes.

In that context, the patent covers the use of ARG-007 as a therapeutic compound to prevent brain cell death in patients with stroke, traumatic brain injury, and hypoxic ischaemic encephalopathy (HIE).

ARG-007 is a neuroprotective drug which has shown efficacy in animal models to reduce brain cell death.
 

Running Cold

Here’s a summary of the stocks that were running cold for the two weeks ended Friday, December 10: