The relative strength index (RSI) is an important technical indicator for stock traders.

It helps measure how actions of the “herd” may drive the stock of a given company up or down — moves which may not always be in line with the company’s fundamentals.

For a detailed description of how it works, click here.

Each week, Stockhead provides a simple summary of outliers on the RSI, to get a technical gauge of how trading momentum is affecting the price action.

A reading of 70 is seen as the level at which a company’s been overbought. If a stock has a reading of 30 or below, it may be undervalued. Here’s this week’s list:

Running hot

Over the past two weeks, 29 companies recorded an RSI reading of at least 75.

This time around, a couple of mining companies surged to the front in the wake of some recent M&A activity.

Bligh Resources (ASX: BGH) had the hottest RSI measure with a reading of 91. That was no-doubt driven by Friday’s surge, when the company announced Saracen (ASX:SAR) had made an off-market takeover bid valuing the junior gold explorer at 12.8c per share – a 97 per cent premium to Bligh’s last closing share price.

Another stock strongly in demand was Marquee Resources (ASX:MQR), which announced it had acquired a company in the lithium-rich Centenario Salar region of Northern Argentina.

As part of the deal the shareholders of the target company — Centenario Lithium — agreed to tip in no less than $500,000 in a capital raise at 10 cents per share; a significant premium to MQR’s last traded price.

Here’s a summary of the stocks that were running hot for the two weeks ended Friday, June 14:

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Running cold

On the other end of the spectrum, there was a longer list of stocks running cold this week with 43 companies recording an RSI of 25 or below.

Investment advisory company Evans Dixon (ASX: ED2) recorded an RSI reading of just 7.96 — the lowest measure since the launch of our Hot Money section.

The embattled firm closed the week at just 79.5 per cent — a 70 per cent decline from last year’s listing price of $2.50.

With its business model under increased scrutiny, Alan Dixon stepped down as CEO on Wednesday to devote more resources towards the company’s struggling residential property fund in the US.

Here’s a summary of the stocks that were running cold for the two weeks ended Friday, June 14:

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