The big Friday surge for Merchant House (ASX:MHI) was enough to put the stock at the top of this week’s Running Hot list, with an RSI of 97.

Stockhead’s Hot Money Monday analysis is based on the Relative Strength Index (RSI) — 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, April 16:

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

Demand for MHI shares ran hot after the company flagged the $US20m sale of its China-based textiles business.

Mainstream Group Holdings (ASX:MAI) — an administration services provider for funds management companies — also ran hot after announcing during the week it had become the subject of a bidding war.

MAI entered into a Scheme of Arrangement with Vistra last month, but said a superior offer from SS&C Technologies Holdings has now emerged at $2 per share — a 67 per cent premium to the Vistra offer.

And telecommunications company Field Solutions Group (ASX:FSG) also posted an RSI above 90 after rising for six of the last nine trading days.

FSG closed out the week with some positive news flow after announcing it had landed a $20.475m contract as part of the federal government’s Regional Connectivity Program.

A total of 30 ASX small caps posted a two-week RSI above 70 this week, up from 26 in the week prior amid another round of steady gains on the broader market.
 

Running Cold

Here’s a summary of the stocks that were running cold for the two weeks ended Friday, April 16:

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