For the better part of a decade, the potential business case for virtual/augmented reality has stayed on the investor radar without many material developments.

But ASX small cap investors have latched onto the theme in November, with two VR-adjacent plays running hot to close out the month.

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 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, November 26:

Indoor Skydive Australia (ASX:IDZ) has been mooning this month — up almost 200% since November 1.

Recent demand for the stock resulted in a red-hot 14-day RSI of 90, and it forms part of what looks like a recent trend among ASX investors to snap up small caps with exposure to the VR/AR (virtual reality/augmented reality) thematic.

Back in August, IDZ announced plans to acquire virtual reality production studio Red Cartel, which built a VR free-roam game for IDZ’s VR-themed FREAK entertainment business, and also had a military VR training tool under development.

Earlier this month, the company opened its fourth FREAK complex at Macquarie shopping centre in North Ryde, Sydney.

It also announced the appointment for former high-ranking military official Mark Smethurst as a non-executive director, as it targets the global market for military and law enforcement simulation products.

Elsewhere in the VR/AR space, Vection Technologies (ASX:VR1) posted a 14-day RSI of 80 and has almost tripled over the past month.

The company is involved in developing VR’s use-case for sectors such as construction and industrial production.

This week the company rolled out its FrameS Metaverse release, as part of its app integration with Webex by Cisco.

The aim of the new features is to enable clients to build out virtual 3D models for new projects, through a platform where people participate from anywhere in the world using Cisco’s Webex video conferencing platform.

Vection’s COO Gianmarco Orgnoni caught up with Stockhead to discuss the latest developments in an interview earlier this week.

Running Cold

Here’s a summary of the stocks that were running cold for the two weeks ended Friday, November 26:

Among stocks running cold, semiconductor play Archer Materials (ASX:AXE) shivered after steady declines through the month of October.

AXE made an appearance on the Running Hot list back in August, when the stock mooned as high as $2.66 following a series of patent announcements.

On either side of its AGM presentation last week, the stock continued sliding and closed on Friday at $1.20.

Also running cold was BNPL player Laybuy Holdings (ASX:LBY), as the broader sector comes under a sustained bout of pressure heading into the end of the year.

Shares in LBY have fallen on 14 out of 20 trading days so far in November to close on Friday at 30c.

In September 2020, the New Zealand based company ripped higher on debut after raising $40m from investors at $1.41 per share.