If you’ve been watching the recent price action in lithium stocks, this week’s edition of Hot Money may not come as a huge surprise.

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 look out 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, August 6:

Scroll or swipe to reveal table. Click headings to sort.

Running hottest this week was Red Hill Iron (ASX:RHI), and with good reason.

The company lived the small cap dream last week when it sold its 40% stake in the 820 million tonne Red Hill Iron Ore joint venture for a lazy $400m in cash.

That news prompted a 270% intraday gain last Monday, and the stock kept climbing throughout the week. Shares in RHI are now up by more than 2,000% over the past year.

Elsewhere in the Running Hot list, a central theme (or rather question) emerged, as Stockhead’s Reuben Adams put it last week; what the hell is going on with lithium stocks?

No less than seven lithium stocks posted a 14-day RSI above 70, led by Lake Resources (ASX:LKE) which registered a reading of 87.

LKE shares have almost tripled since late May, with steady gains that have continued into August amid relatively little news flow.

Rounding out the top three was Lithium Energy (ASX:LEL), which debuted on the ASX in May and closed on Friday at 65c — a 225% premium to its listing price.

Shares in the company popped again on Thursday, after it announced that its Solaroz lithium project is entering the final stages of evaluation by regulatory authorities in Argentina.

 

Running Cold

Here’s a summary of the stocks that were running cold for the two weeks ended Friday, August 6:

Scroll or swipe to reveal table. Click headings to sort.

Tech firm Appsvillage (ASX:APV) was among the stocks running cold, with a 14-day RSI of 23.

From November 2019 highs of almost 40c, shares in the company have declined steadily and the stock closed on Friday at 4.3c.

APV’s 4C filing for the June quarter showed it booked net cash outflows of $812,543 on receipts of $95,210, and finished the quarter with $896,671 in cash.