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Shares RSIs, highs and lows

A regular look at shares trading close to significant levels.

Water firm Severn Trent is enjoying a strong rise, having gained ground for six weeks. It has risen through the highs seen in October last year and in March 2014, and is now overbought on a daily chart. Also overbought is Vedanta Resources, now at its highest level since November and looking to challenge the £11 level that marked the peak at the beginning of that month.

Our oversold shares remain distinctly unloved; with broader market sentiment still shaky these shares have been unable to rally in any meaningful fashion.

Relative Strength Index (RSI)*

Company

Share Price

Oversold

Company

Share Price

Overbought

Drax Group 588 20.49 United Utilities Group 853

76.80

Lonmin 236.3 21.03 Salamander Energy 144.75 75.73
Bwin.Party Digital Entertainment 116.5 21.61 Severn Trent 1920 74.52
Mothercare 143 21.77 National Grid

879.5

74.39
Renishaw 1651 22.74 Heritage Oil 314.8 73.46
Chemring

209.75

23.30 Vedanta Resources 1070 72.32
Balfour Beatty 220.9 24.09 Compass Group 986.5 71.41

 

Oil firms dominate the list of companies close to their 52-week highs, as traders push these shares higher in expectation that the price of crude oil will be lifted by continuing tensions in Ukraine.

One company that was on the list of those close to major lows is Tesco, and although it has dropped today the probe of the 280p level saw a re-entry of buyers, indicating that these levels can be important for identifying short-term bounces.

.

Highs/Lows**

Company

Share Price

% off 52-week high

Company

Share Price

% off 52-week low

BP 506.2 -0.75% Experian 1027 0.69%
Reckitt Benckiser 5080 -0.78% Lonmin 236.3 1.11%
Heritage Oil 314.8 -0.98% Kenmare Resources 10 1.42%
United Utilities Group 853 -1.04% Dignity

1337

2.30%
Imperial Tobacco Group

2658

-1.12% Dairy Crest Group 460.7 3.27%
InterContinential Hotels Group 2202 -1.34% Intertek Group 2882 3.37%
Royal Dutch Shell 2349 -1.51% Informa 484.8 4.53%

 

*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.

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.