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Shares RSIs, highs and lows

Chris Beauchamp takes quick look at shares trading at significant levels.

Salamander Energy is overbought this morning after bid talks, joining Heritage Oil and AstraZeneca on the list of those companies propped up by takeover reports. Shire’s strong results have lifted it too, and once the frothiness is taken out of the share price it is likely to move higher.

Greggs trades near a 52-week high as well, lifted by better performance in recent weeks.

Meanwhile, Serco continues to languish after its most recent profit warning, while N Brown is dropping back after briefly spiking following results this week.

Relative Strength Index (RSI)*

Company

Share Price

Oversold

Company

Share Price

Overbought

Salamander Energy  143 92.43 Serco Group 350.6 16.07
BG Group 1241.5 82.99 Chemring Group 224.25 20.75
AstraZeneca  4783 80.10 Fidessa Group 2260 21.32
Heritage Oil 314.4 74.70 Paragon Group of Cos 363.7 24.82
Royal Dutch Shell  2336 74.49 CSR 572 25.62
SuperGroup 3464 73.84 N Brown Group 483.3 26.91
CSR 544 73.01 CPP Group 9.125 27.56

 

Intercontinental’s results this morning have pushed the shares 9% higher, and they are now looking to build on new all-time highs. It is also worth keeping an eye on National Grid, as it heads towards 850p. We were here last year, and then the shares dropped rapidly, so anyone initiating a long in National Grid should be careful not to be caught out if 850p proves to be too high a level once again.

Morrisons and Tesco are still unloved, but while Morrisons is beginning to look very vulnerable to further declines, Tesco is obstinately refusing to go below 280p.

Highs/Lows**

Company

Share Price

% off 52-week high

Company

Share Price

% off 52-week low

InterContinential Hotels Group 2220 -0.54% WM Morrison Supermarkets  195.6 0.41%
AZ Electronic Materials SA 402.1 -0.72% Tesco  285.7 2.59%
Shire  3464 -0.77% International Public Partnerships 128.2 3.81%
National Grid 840.5 -1.06% Informa  485.1 4.21%
Heritage Oil  341.4 -1.10% Dairy Crest Group  465 4.24%
AstraZeneca 4783 -1.26% Intertek Group  2929 5.06%
United Utilities Group  798 -1.42% UBM  655.5 5.90%

 

*What is a relative strength index?

Relative strength index is a technical momentum indicator that compares the magnitude of recent gains to recent losses in an attempt to determine overbought and oversold conditions of an asset.

An asset is viewed as overbought once the RSI approaches the 70 level, meaning that it may be getting overvalued and is a candidate for a possible pullback. Conversely, if the RSI approaches 30, it is an indication that the asset may be oversold and may become undervalued.

**What is the significance of 52-week highs and lows?

One popular strategy is to buy when shares exceed 52-week highs and sell when they fall below 52-week lows.

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