Hot Money Monday: These are the most in-demand stocks on the ASX right now

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Each Monday, Stockhead recaps which stocks are most heavily in demand by investors — running hot.

The 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 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, May 22:

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

Are things starting to get bullish? After the number of companies on the Running Hot list fell to just two at the height of the COVID-19 crisis, there was another sharp jump last week.

Stockhead’s data team counted no less than 108 small-cap stocks with a two-week RSI above 70 — well above the previous week’s measure of 47.

A number of companies on the list have climbed in the wake of new capital raising announcements, as companies adjust their plans to account for the economic impact of the pandemic.

Last week, Stockhead’s Reuben Adams pointed out that in the month of April alone, there were more than 60 offers from sub-$500m market cap companies.

And investors who participated in those rounds have been well rewarded, with 47 of those companies currently trading at a higher level than the offer price.

Running Cold

Here’s a summary of the stocks that were running cold for the two weeks ended Friday, May 22:

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

In line with the ongoing outperformance of the Small Ords index in recent weeks, the Running Cold list remains thinly populated.

A total of 23 stocks registered a 14-day RSI below 30 last week, down slightly from 24 in the week prior.

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