Shares RSIs, highs and lows

Our regular look at shares trading at significant levels.

Compass is a new entrant to the overbought list, as the stock gains ahead of earnings this week. We are now heading towards the 980p level that proved to be too much for the shares in January, so we can expect to see increased volatility as we approach this peak. The shares have gained around 7.7% since the middle of April, a sign that investors have been buying into the stock ahead of figures on Wednesday.

Petrofac is still oversold after its disastrous day on Friday, when an update saw 2014 profit targets slashed thanks to underperforming projects. The shares have found a floor above this year’s lows, close to £11, and are now attempting to rally from here.

Relative Strength Index (RSI)*

Company

Share Price

Oversold

Company

Share Price

Overbought

Petrofac 1214 18.20 Salamander Energy 144.25 83.45
SuperGroup 1062 21.00 BG Group 1263 80.62
Balfour Beatty 223.6 21.12 InterContinental Hotels Group 2184 75.09
Chemring Group 213.25 23.03 Royal Dutch Shell 2360 74.68
Serco Group 342.2 26.40 Heritage Oil 315.3 74.59
WS Atkins 1317 28.22 Provident Financial 2113 74.03
Petropavlovsk 68.5 28.75 Compass Group 974 73.49

 

National Grid is on the verge of fresh highs for the year, following a strong end to trading on Friday. This is another stock with figures this week (on Thursday), and these could be key to whether the upward momentum can be sustained. Experian’s figures from last week were not well-received, which is why the stock is hovering around £10.50. If this level breaks it may signal a slump towards a sub-£10 level, perhaps around the December 2012 lows close to £9.80.

Highs/Lows**

Company

Share Price

% off 52-week high

Company

Share Price

% off 52-week low

National Grid 857 -0.06% Mothercare 164 1.39%
Imperial Tobacco Group 2619 -0.23% Experian 1049 2.84%
United Utilities Group 825 -0.24% Dairy Crest Group 461.3 3.41%
Provident Financial 2113 -0.70% Centrica 317 4.79%
Heritage Oil

315.3

-0.82% GlaxoSmithKline 1606 5.10%
Dexion Absolute Ltd 166 -0.90% International Public Partnership 130.3 5.51%
Royal Dutch Shell 2360 -1.05% Informa 492.5 5.80%

 

*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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