Finsbury Growth & Income Trust Plc (FGT.L) shares have popped up on the radar as the RMI or Relative Momentum Indicator has trended higher over the past 5 sessions. As the momentum builds, we will be closely watching to see if they cross into Overbought territory.
The Relative Momentum Index is calculated as the ratio of average upward price changes to the average absolute price change. The index requires two parameters. The first parameter is the number of periods used to determine price change. The second parameter is the number of periods to average these changes over. The permissible values for RMI lie in the range between 0 and 100. Whilst a crossing of the center line may be interpreted as a warning of an impending trend change, only values over 70 are usually regarded as a buy signal and those below 30 as a sell signal.
As earnings season kicks into high gear, investors may be analyzing the numbers and trying to decide what to do next. Investors may be choosing to buy companies that have a proven track record of solid earnings growth. Other investors may be looking to spot the diamonds in the rough that haven’t necessarily broken out yet. It may be wise to research companies that continually string together superior quarters. One great quarter or one horrible quarter may not provide enough information to justify either a buy or a sell. Many investors will look deeper into the numbers for companies that produce much wider surprise factors than expected. This may occur on either end of the dial with a beat or a miss. Earnings reports also have the ability to cause severe stock price fluctuations. Some traders will look to catch some profits while others may stay on the bench until the dust has cleared.
Crossing over to look at some additional metrics, we note that Finsbury Growth & Income Trust Plc (FGT.L) currently has a 50-day moving average of 813.59, the 200-day is at 797.61, and the 7-day is 842.86. In the investing realm, using the moving average for technical equity analysis is still very popular among traders and investors. The moving average can be used as a reference point to help discover buying and selling opportunities. Using a longer term moving average such as the 200-day may help block out the noise and chaos that is sometimes created by daily price fluctuations. In some cases, MA’s may be used as strong reference points for finding support and resistance levels.
Finsbury Growth & Income Trust Plc (FGT.L)’s Williams Percent Range or 14 day Williams %R currently sits at -11.53. The Williams %R oscillates in a range from 0 to -100. A reading between 0 and -20 would point to an overbought situation. A reading from -80 to -100 would signal an oversold situation. The Williams %R was developed by Larry Williams. This is a momentum indicator that is the inverse of the Fast Stochastic Oscillator.
Finsbury Growth & Income Trust Plc (FGT.L) currently has a 14-day Commodity Channel Index (CCI) of 87.76. Active investors may choose to use this technical indicator as a stock evaluation tool. Used as a coincident indicator, the CCI reading above +100 would reflect strong price action which may signal an uptrend. On the flip side, a reading below -100 may signal a downtrend reflecting weak price action. Using the CCI as a leading indicator, technical analysts may use a +100 reading as an overbought signal and a -100 reading as an oversold indicator, suggesting a trend reversal.
Currently, the 14-day ADX for Finsbury Growth & Income Trust Plc (FGT.L) is sitting at 27.41. Generally speaking, an ADX value from 0-25 would indicate an absent or weak trend. A value of 25-50 would support a strong trend. A value of 50-75 would identify a very strong trend, and a value of 75-100 would lead to an extremely strong trend. ADX is used to gauge trend strength but not trend direction. Traders often add the Plus Directional Indicator (+DI) and Minus Directional Indicator (-DI) to identify the direction of a trend.
The RSI, or Relative Strength Index, is a widely used technical momentum indicator that compares price movement over time. The RSI was created by J. Welles Wilder who was striving to measure whether or not a stock was overbought or oversold. The RSI may be useful for spotting abnormal price activity and volatility. The RSI oscillates on a scale from 0 to 100. The normal reading of a stock will fall in the range of 30 to 70. A reading over 70 would indicate that the stock is overbought, and possibly overvalued. A reading under 30 may indicate that the stock is oversold, and possibly undervalued. After a recent check, the 14-day RSI is currently at 69.18, the 7-day stands at 73.12, and the 3-day is sitting at 78.47.
With the stock market still reaching new heights, investors may be wondering how long the good times will keep rolling. It may be tempting to sell some winners to lock in profits at these levels. Of course, nobody can predict how long the market run will continue, but having a plan in place for the possibility of a downturn might be well worth it. Investors may want to regularly check the balance of the portfolio. There might be a few names in the portfolio that have recently taken off to the upside. This may disturb the equilibrium of the portfolio. Investors may need to be prepared to shuffle some profits into other sectors in order to stay in balance. Being able to ride out unexpected spikes or dips may involve keeping a regular watch on economic data and the overall stability of global markets. Investors who are able to avoid panic selling may be able to more efficiently analyze the data necessary to make informed decisions. Having a cool and collected approach may end up being one of the most important traits that the average investor could develop. Finding the proper methods to stay patient when the markets are in a frenzy might just help the investor ride out extended periods of flux and uncertainty.