Hot Money Monday: Which ASX small caps are riding high on momentum, and which are oversold?

Momentum trading involves buying a stock that has shown a significant movement in price or volume.

One of the main benefits of momentum trading is that it can generate high returns in a short period of time, especially in volatile markets.

Obviously there’s a bit of risk involved in momentum trading because in essence, you’re making a decision to buy a stock based on recent buying activities of other traders.

So to be a successful momentum trader, one needs to be able to identify the best stocks quickly and accurately.

The goal for momentum traders is basically to enter into trades at key points in the trend in order to maximise profits.

There are several indicators to quantify momentum, and here we look at three main signals used by the market:

52-week high
Simple Moving Average
Relative Strength Index

10 ASX small caps nearest or at 52-week highs

Traders often view the 52-week highs as entry signals.

This is due what’s called the “52-week high effect” – where if a price has broken out above its 52-week range, there must be some factor that generated enough momentum to further continue the price movement in the same direction.

On the other hand, if a stock is far away from its 52-week high, chartists believe the momentum will continue going that way.

10 ASX small caps at 52-week high

(Data from Commsec)

Code Name Price How far from 52-Week High? 1 mth return 6 mth return 12 mth return BTC BTC Health $0.05500 0.00% 27.91% 266.67% 48.65% KEY Key Petroleum $0.00200 0.00% 33.33% 0.00% 33.33% SUH Southern Hemisphere $0.03500 0.00% 40.00% 120.82% 96.30% IME ImExHS $0.70000 0.00% 20.69% 12.00% 52.17% ACP Audalia Resources $0.01200 0.00% 9.09% 20.00% 20.00% HLA Healthia $1.76800 0.42% 1.00% 46.07% 50.43% KAT Katana Capital $1.15000 1.29% 3.60% 3.60% 5.02% ENA Ensurance $0.27000 1.82% 0.00% 38.46% 10.20% DVR Diverge $1.06000 1.85% 0.95% 24.71% 8.72% SKT SKY Network Television $2.62000 2.60% 13.91% 7.38% 23.58%

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BTC Health (ASX:BTC)

The biotech sector investor says its wholly owned investee company, BioImpact, will retain exclusive rights to distribute Bronchitol and Aridol in Australia.

This, BTC says, is despite an announcement by Pharmaxis (ASX: PXS), advising it has agreed to sell its mannitol business to Arana Pharma.

BTC says there is no change in respect of the exclusive licence and distribution rights currently held by BioImpact.

“It is expected that the distribution agreement between Pharmaxis and BioImpact, which was entered into on 30 June 2021, with an initial term of 10 years, will be assigned from Pharmaxis across to Arana Pharma in due course,” said BTC.

Southern Hemisphere Mining (ASX:SUH)

SUH has entered into a drilling contract with DV Drilling in Chile for Diamond and RC drilling at its flagship Llahuin Copper-Gold Project.

The drilling program will test multiple targets generated from the recent soil geochemistry sampling program, and downdip zones from the previous drilling program.

The Southern Porphyry copper-gold target will also be tested in the program,

Recent rock chip sampling highlight grades of up to 7.28%Cu, 18.65g/t Au, 55g/t Ag.

IMEXHS (ASX:IME)

IMEXHS Radiology services (RIMAB) has won a new $1.6m, three-year contract, with the San Carlos Hospital Foundation in Bogota, Colombia.

The contract is expected to contribute $530,000 in Annual Recurring Revenue (ARR).

IMEXHS’s cloud-based Enterprise Software is to be implemented at the San Carlos Hospital Foundation.

10 ASX small caps with prices above SMA

Simple Moving Averages (or SMA) is another indicator that can be used to gauge momentum.

SMA is often used to determine whether a stock price will continue in the same direction, or if it will reverse a bull or bear trend.

As a general rule, if the current stock price is above the SMA, the price trend is up. If the price is below the SMA, the trend is down.

10 ASX small caps at prices above SMA

(Data from Commsec)

Code Name Last Price Value Price vs. Simple Moving Average Price vs. 20 day SMA Price vs. 50 day SMA Price vs. 200 day SMA ADX ADX Energy $0.1150 1 to 5% Above SMA >5% Above SMA >5% Above SMA >5% Above SMA CT1 Constellation Technologies $0.0030 >5% Above SMA >5% Above SMA 0 to 1% Above SMA < -5% Below SMA ATP Atlas Pearls $0.0990 >5% Above SMA >5% Above SMA >5% Above SMA >5% Above SMA BBX BBX Minerals $0.0290 >5% Above SMA >5% Above SMA -1 to -5% Below SMA < -5% Below SMA BPH BPH Energy $0.0320 >5% Above SMA >5% Above SMA >5% Above SMA >5% Above SMA BTC BTC Health $0.0550 >5% Above SMA >5% Above SMA >5% Above SMA >5% Above SMA BUY Bounty Oil & Gas NL $0.0090 >5% Above SMA >5% Above SMA >5% Above SMA >5% Above SMA HCT Holista Colltech $0.0130 >5% Above SMA >5% Above SMA 1 to 5% Above SMA < -5% Below SMA ALA Arovella Therapeutics $0.0880 >5% Above SMA >5% Above SMA >5% Above SMA >5% Above SMA GRV Greenvale Energy $0.1050 >5% Above SMA >5% Above SMA >5% Above SMA 0 to -1% Below SMA ZNO Zoono Group $0.0460 >5% Above SMA >5% Above SMA 1 to 5% Above SMA < -5% Below SMA JGH Jade Gas Holdings $0.0420 >5% Above SMA >5% Above SMA >5% Above SMA -1 to -5% Below SMA CLE Cyclone Metals $0.0020 >5% Above SMA >5% Above SMA >5% Above SMA >5% Above SMA IMD Imdex $1.6750 >5% Above SMA >5% Above SMA 1 to 5% Above SMA < -5% Below SMA

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ADX Energy (ASX:ADX)

ADX said it expects to receive an environmental clearance from in Austria on or before 30 October for the Welchau Gas Prospect.

The environmental clearance is the last regulatory requirement to commence operations on the project.

Upon receipt of the environmental clearance, ADX will commence drill site construction and plans to commence Welchau-1 drilling operations during December.

BBX Minerals (ASX:BBX)

BBX announced the repayment of the funding facility with Lind Global Fund II LP, which was announced on 31 March.

Following the completion of tranche 1 of the recent capital raising, the company has taken the decision to repay the funding facility.

This repayment eliminates the market uncertainty surrounding the ongoing conversion of this instrument to equity.

10 ASX small caps with low RSI (Oversold)

Here’s another momentum signal used by the market – the Relative Strength Index (RSI).

RSI is a measure of the strength of a stock’s momentum, either in the upward or the downward direction, and is used to indicate whether a stock is oversold or undersold.

Generally speaking, an RSI above 70 means a stock is overbought; and an RSI below 30 indicates that it’s oversold.

An RSI above 80 meanwhile is strongly overbought, and an RSI below 20 is strongly oversold.

10 ASX small caps at prices with RSI Oversold Signal

(Data from Commsec)

Code Name 2 Day RSI 9 Day RSI 14 Day RSI 20 Day RSI AAC Australian Agricultural — Oversold Oversold — ABG Abacus Oversold Oversold Oversold Oversold CQE Charter Hall Social Infrastructure REIT — Oversold — — CGO CPT Global — Oversold Oversold — CLV Clover Corporation — Oversold — — SW1 Swift Networks — Oversold — — DJW Djerriwarrh Investments — Oversold — — GCR Golden Cross Resources Oversold Oversold — — SP8 Streamplay Studio Oversold Oversold — — HLX Helix Resources Oversold Oversold Oversold — HZN Horizon Oil Oversold Oversold — — JIN Jumbo Interactive Oversold Oversold — — OMH OM Holdings — Oversold — —

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Swift Networks (ASX:SW1)

Swift announced new agreements generating $1.6 million in revenue.

Swift has signed new infrastructure and subscription contracts with multiple aged care providers, including Eldercare, Royal Freemasons, and Retiree’s WA.

Renewal also signed for Hall and Prior’s Karingal Green Health & Aged Care Community.

Mineral Resources (ASX:MIN) meanwhile has expanded its agreement with Swift for an additional four sites.

Streamplay Studio (ASX:SP8)

Streamplay has continued its expansion into Pacific markets with Telstra-owned Digicel Pacific in Vanuatu.

Streamplay’s integration with Digicel is near complete in Fiji, with imminent launch of services in coming weeks.

The partnership with Digicel Pacific also marks a strategic expansion into the Vanuatu market, enhancing its competitive position in digital entertainment across the Pacific Islands.

At Stockhead we tell it like it is. While Southern Hemisphere Mining and ADX Energy are Stockhead advertisers, they did not sponsor this article.

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