Welcome back to Hot Money – 2022 edition.

The weekly Stockhead article 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, January 7:

Two lithium stocks were up near the top of this week’s Running Hot list, starting with Global Lithium (ASX:GL1) which had a comparatively busy new years period after completing the acquisition of an 80% interest in the early stage Manna lithium project from Breaker Resources (ASX:BRB).

Recent drilling at the WA project over an area of 350 metres to the south of Manna 1 has confirmed the discovery of a new zone of spodumene-rich pegmatites, the company said on New Year’s Eve.

From a close of 60.5c on December 20, Gl1 shares ramped to finish last Friday near $1.20 — good enough for a Christmas/New Years gain of around 100%.

Also posting a red-hot 14-day RSI near 90 was lithium miner Green Technology Metals (ASX:GT1), which got a speeding ticket from the ASX last Tuesday following a sharp spike on no news.

GL1 and GT1 both ran close behind Quantum Graphite (ASX:QGL), which had a big month following a bumpy couple of years where it was suspended from trading due to insufficient exploration activity at its ‘Uley’ graphite mine in South Australia.

Having got its affairs in order, QGL returned to the boards with a bang in the middle of last month and continued to push higher over the Christmas break.

Rounding out the top 5 was clean-tech stock The Environmental Group (ASX:EGL), which has also been on a tear since announcing a successful trial for its PFAS water treatment technology on December 8.

EGL holds a high weighting in the portfolio of pro fund manager Josh Baker, and investors who acquired the stock in the wake of Baker’s interview with Stockhead back in September would have reaped a return on their investment of more than 100% at current prices.

 

Running Cold

Here’s a summary of the stocks that were running cold for the two weeks ended Friday, January 7: