Data Insights

The most overbought and oversold ASX stocks – Week 21

Wed 22 May 24, 12:38pm (AEST)
stocks that are overbought and oversold
Source: Shutterstock

Key Points

  • Aristocrat breaks to fresh record highs - how high can it go?
  • Bendigo and Adelaide leaves big round number in its wake, boosted by well received trading update
  • Long-term winner James Hardie takes a hit on profit warning - is it a buying opportunity?

As usual, the overbought and oversold lists make for interesting reading, with company announcements driving most of the action.


The 14-day Relative Strength Index is a momentum indicator that measures the magnitude and speed of recent price changes to assess whether or not a stock is overbought or oversold.

An RSI of 70 or above is considered to be overbought, which means the stock is rising too quickly and likely to experience a pullback. Meanwhile, an RSI of 30 or below is considered to be oversold, which means the stock is falling too quickly and is likely to experience a rebound.


Most Overbought ASX Stocks

Company

RSI(14)

Last Price

1-mo Chg%

New O/B?

Aristocrat Leisure (ALL)

77

$46.58

+16.5%

-

Altium (ALU)

78

$66.88

+2.3%

-

Bendigo and Adelaide Bank (BEN)

81

$11.02

+14.7%

-

Base Resources (BSE)

84

$0.280

+161.9%

-

Global Data Centre Group (GDC)

85

$2.81

+24.8%

-

Gentrack Group (GTK)

76

$8.60

+16.8%

-

Nickel Industries (NIC)

77

$1.040

+25.3%

-

Nuix (NXL)

82

$3.02

+58.0%

-

OFX Group (OFX)

79

$2.00

+34.8%

Y

PSC Insurance Group (PSI)

78

$6.03

+15.1%

-

Data as of the close on Tuesday, 21 May 2024. Liquidity filter applied (stocks with a close price greater than $0.05, market capitalisation greater than $200 million, and average daily turnover over the last 21 days greater than $500,000.

There was only one new entrant in the top 10 most overbought list since the last update, OFX Group (ASX: OFX) . Truth be told, it's not a very interesting chart, with the share price rallying on an announcement but failling to take out the swing highs from July / August last year.

ALL 12-month chart
Aristocrat Leisure chart

The Aristocrat Leisure (ASX: ALL) chart, above, makes for more interesting reading. ALL surged recently on its HY24 results announcement and the share price has taken out the prior swing high from March this year. The stock is now trading in clear air and it will be interesting to see if it can kick higher from here.

BEN 12-month chart
Bendigo and Adelaide Bank chart

The Bendigo and Adelaide Bank (ASX: BEN) chart makes for interesting reading because the bulls had been threatening to break the price action higher for some time. From late last year through to mid may, the price action has been hovering under the $10 round number, breaching it briefly in April before falling back.

A recent trading update was well received by the market, however, and the $10 level has now been cleared convincingly. Technical analysis theory suggests $10 could now act as a support level on any retest, and it could provide a platform for the stock to push higher from over time.

GDC 12-month chart
Global Data Centre Group chart

Data centres are so hot right now (riding the AI thematic) and the Global Data Centre Group (ASX: GDC) chart is a great reflection of this. Recent positive newsflow seems to have also given it a boost, adding fuel to an already raging fire!

Momentum is strong, too. The RSI is 85 which I would call 'extreme' overbought (i.e. anything above 80). Don't read too much into a high RSI, however. Stocks that have strong momentum, good industry dynamics, and are part of a narrative that the market likes, can stay overbought for extended periods.


Most Oversold ASX Stocks

Company

RSI(14)

Last Price

1-mo Chg%

New O/S?

Autosports Group (ASG)

22

$2.34

-10.7%

-

Cettire (CTT)

26

$2.49

-19.4%

-

Dicker Data (DDR)

22

$9.05

-16.0%

-

Fletcher Building (FBU)

21

$2.67

-24.8%

-

Helloworld Travel (HLO)

28

$2.31

-12.2%

Y

James Hardie Industries (JHX)

24

$46.67

-12.5%

Y

Weebit Nano (WBT)

22

$2.22

-23.5%

-

Mayne Pharma Group (MYX)

27

$5.45

-18.2%

Y

Select Harvests (SHV)

28

$3.15

-20.1%

Y

Spark New Zealand (SPK)

23

$3.82

-10.5%

-

Data as of the close on Tuesday, 21 May 2024. Liquidity filter applied (stocks with a close price greater than $0.05, market capitalisation greater than $200 million, and average daily turnover over the last 21 days greater than $500,000.

I don't like to spend to much time focusing on the oversold list - I'm a trend follower not a mean reversion trader. For what it's worth, though, there were four new entrants in the top 10 oversold list since the last update: HLO, JHX, MYX, SHV.

Of these, the stock that stood out the most for me was James Hardie Industries (ASX: JHX). JHX has been a long-term winner, but was been beaten on Tuesday following its latest trading update which forecast a fall in profits over the next year on weaker demand. The question begs, is this an opportunity to buy a long-term winning company on weakness?

Time will tell.

JHX 12-month chart
James Hardie Industries chart

 

Written By

Chris Conway

Managing Editor

Chris is the Managing Editor at Livewire Markets and Market Index. His passion is equity research, portfolio construction, and investment education. He is also very keen on the powerful processes that can help all investors identify great opportunities and outperform the market, and wants to bring them to life and share them with you.

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