Hot Money Monday: The most in-demand stocks on the ASX right now
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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:
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.
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.