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Shares RSIs, highs and lows

A regular look at shares trading close to significant levels.

All trading involves risk. Losses can exceed deposits.

Although it is bouncing this morning and appears to have found a floor at £21, Rightmove is still on our oversold list. The listed property website has enjoyed a phenomenal rally, but now talk of curbs on the housing market is causing investors to book gains. There appears to be little support for the share price in the longer term and only £20 on the weekly chart provides some hope. Should that disappear then £14.30 is the next stop, which would signal a loss of all of 2013’s gains.

National Grid is overbought this morning, as it touches fresh all-time highs. We have seen the shares move above the December 2007 peak, easing fears that investors could become jittery around this level. BG Group has returned to its overbought state, after dipping lower last week. £12.82 has provided some resistance, but the shares are currently above this level, which signals a possible retest of the January high at £13.50.

Relative Strength Index (RSI)*

Company

Share Price

Oversold

Company

Share Price

Overbought

SuperGroup 981.5 22.13 Salamander Energy 147.75 80.92
Bwin.Party Digital Entertainment 113.8 22.42 BG Group 1285.5 77.28
QinetiQ Group 195.5 22.50 National Grid 882 75.95
Drax Group 607 22.61 Compass Group

994

74.97
Close Brothers Group 1255 22.90 Aggreko 1711 73.85
Rightmove

2127

23.02 Heritage Oil 314.9 73.63
Chemring Group 207.5 23.10 Diageo 1945 72.70

 

National Grid has dropped back from its fresh high, but the important thing is that it is above both its high from 2013 and the one from 2007. This signals that there remains significant buying pressure in the stock. However, for Dairy Crest, buyers are in short supply as sentiment turns sour on the milk producer. Although it is off the lows of last week the shares still look weak, and 446p, the lows of June and September 2013, is the level to watch.

Highs/Lows**

Company

Share Price

% off 52-week high

Company

Share Price

% off 52-week low

United Utilities Group 845.5 -0.06% Mothercare 143.5 0.00%
Imperial Tobacco Group 2674 -0.15% Lonmin 243.2 0.08%
National Grid 882 -0.40% Experian 1031 1.08%
BP 507.1 -0.57% Dairy Crest Group

452.3

1.39%
Reckitt Benckiser

5060

-0.78% Informa 473.7 2.13%
Associated British Foods 3021 -0.89% Kenmare Resources 11.5 2.22%
Heritage Oil 314.9 -0.94% Ladbrokes 131.2 2.26%

 

*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.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material 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. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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