Shares RSIs, highs and lows

A regular look at shares trading close to significant levels.

Yesterday’s selloff has done nothing for those shares already beaten down by recent bad news, and this has meant that our oversold list has not seen much change. Defence firm Qinetiq is on the list too, the shares having slumped in recent days. They are now touching 195p, the lowest level in over six months, and sit on key support from mid-November 2013.

Although not much changed today, United Utilities has touched highs not seen since 1999 this week. 876p remains the major upside resistance, but it seems in these times of heightened volatility the appeal of a secure utility company with a strong dividend should not be underestimated.

Relative Strength Index (RSI)*

Company

Share Price

Oversold

Company

Share Price

Overbought

SuperGroup 1018 21.31 Salamander Energy 146.25 80.38
Petrofac 1174 23.88 Compass 991.5 77.29
Balfour Beatty 219.6 23.93 Aggreko 1700 75.39
Chemring Group 210.5 24.24 United Utilities

843.5

74.31
Renishaw 1668 24.36 Heritage Oil 315.3 73.87
Drax Group

618

25.01 BG Group 1259.5 72.95
Qinetiq 198.6 25.29 IMI 1584 72.67

 

Speaking of utilities, the same factors are driving National Grid. In addition, US investors in the company are picking up the shares again as Treasury yields drop back. Grid’s rally last year was torpedoed by a rise in yields that made US government bonds more attractive, but now it seems yields are heading lower, boosting the appeal of National Grid shares as an income investment as well as a capital one.

Highs/Lows**

Company

Share Price

% off 52-week high

Company

Share Price

% off 52-week low

United Utilities Group 843.5 -0.30% Kenmare Resources 12 0.00%
BP 506.1 -0.76% Mothercare 152.25 0.00%
National Grid 859 -0.81% Lonmin 251.3 0.60%
Heritage Oil 315.3 -0.82% Informa 469.7 0.90%
Imperial Tobacco Group

2651

-0.82% Dairy Crest Group 451 1.10%
IMI 1584 -1.06% Experian 1047 2.65%
Royal Dutch Shell 2357.5 -1.15% International Public Partnership 128.1 3.72%

 

*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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