Shares RSIs, highs and lows

A regular look at shares trading close to significant levels.

Kingfisher has failed to lift itself from the doldrums, after results last week sent the share price reeling. The company fell 6% last Thursday as it reported a drop in margins and a smaller-than-forecast lift to sales thanks to recent warm weather. Although profit growth was stronger, a warning about slower sales growth in the second quarter meant that sentiment was firmly weaker.

Reed Elsevier’s surge to fresh all-time highs has continued this morning, pushing the shares into overbought territory. There is currently little sign of a pullback, and the stock has pulled firmly ahead of the FTSE 100 in the past month, leading with a 6% gain for the year so far versus 1.7% for the index.

Relative Strength Index (RSI)*

Company

Share Price

Oversold

Company

Share Price

Overbought

Petropavlovsk 60 24.02 InterContinental Hotels Group 2346

82.99

AZEM-UK 389.25 25.66 Smith & Nephew 1032 80.44
Fenner 340 26.02 Electra Private Equity 2740 78.37
Sthree 352 28.33 Caledonia Investments

2223

75.22
Carpetright 523.5 29.25 Heritage Oil 317.7 75.00
Punch Taverns

11.25

33.07 United Utilities Group  875 74.58
Kingfisher 392.1 33.46 Reed Elsevier 956.5 74.51

 

Impending figures from Tesco will be big news for the broader supermarket sector, but both Tesco and Morrison are still close to recent lows. In neither case does it appear that the downtrend has come to an end, and a below-par announcement from the Tesco titan could see the selling resume in both names.

Highs/Lows**

Company

Share Price

% off 52-week high

Company

Share Price

% off 52-week low

United Utilities Group 875 0.00% Experian 1040 2.16%
Hikma Pharmaceuticals 1713 -0.06% Kenmare Resources 10.25 3.96%
National Grid 894 -0.22% GlaxoSmithKline 1592 4.19%
Go-Ahead Group 2234 -0.22% Intertek Group

2926

4.95%
Reed Elsevier

956.5

-0.31% International Public Partnerships 129.9 5.18%
Reckitt Benckiser Group 5110 -0.39% Carpetright 523.5 6.19%
IMI 1604 -0.43% Tesco 300.55 7.92%
Heritage Oil 317.7 -0.44% Morrison WM Supermarkets 199.5 8.19%
Pennon Group 786.5 -0.44% Debenhams 76.75 8.33%
Cobham 323.2 -0.46% Marks & Spencer Group 450 8.58%

 

*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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