Emerge Gaming Limited (EM1.AX) shares have sparked the interest of some chartists as the Money Flow Index has climbed above 60, potentially heading for key 70 levels. The Money Flow Index is an indicator that utilizes the volume and volatility of an asset to determine the buying or selling pressure of an asset. The indicator was developed by Avrum Soudack and Gene Quong as a volume-weighted variation of the RSI.
The Money Flow Index is calibrated from 0 to 100, and creates a money flow ratio (Positive Money Flow to Negative Money Flow) over a time period. This money flow ratio is what is pushed into an RSI formula to create a momentum indicator. Being a momentum indicator, the Money Flow Index (MFI) is capable evaluating overbought and oversold market conditions, using values of 70-80 and above for overbought conditions and 20 and below for oversold situations.
Individual investors often have a lot to deal with when surveying the stock market landscape. Choosing stocks based on recent performance may not work out as well as planned. Stocks that were winners last year, last month, or even last week, may not be winners next week, next month, or next year. Digging into the fundamentals can help the investor see what stocks are set up for future success. Taking multiple approaches when viewing a certain security may help the investor put the puzzle together and see the bigger picture. Staying current on economic data can also help the investor obtain a broader sense of what is driving present market conditions.
Taking a deeper look into the technicals, Emerge Gaming Limited (EM1.AX) currently has a 50-day Moving Average of 0.02, the 200-day Moving Average is 0.01, and the 7-day is noted at 0.03. Following moving averages with different time frames may help offer a wide variety of stock information. A longer average like the 200-day may serve as a smoothing tool when striving to evaluate longer term trends. On the flip side, a shorter MA like the 50-day may help with identifying shorter term trading signals. Moving averages may also function well as a tool for determining support and resistance levels.
Traders may be relying in part on technical stock analysis. Emerge Gaming Limited (EM1.AX) currently has a 14-day Commodity Channel Index (CCI) of 58.59. Despite the name, CCI can be used on other investment tools such as stocks. The CCI was designed to typically stay within the reading of -100 to +100. Traders may use the indicator to determine stock trends or to identify overbought/oversold conditions. A CCI reading above +100 would imply that the stock is overbought and possibly ready for a correction. On the other hand, a reading of -100 would imply that the stock is oversold and possibly set for a rally.
At the time of writing, the 14-day ADX for Emerge Gaming Limited (EM1.AX) is 45.06. Many technical chart analysts believe that an ADX value over 25 would suggest a strong trend. A reading under 20 would indicate no trend, and a reading from 20-25 would suggest that there is no clear trend signal. The ADX is typically plotted along with two other directional movement indicator lines, the Plus Directional Indicator (+DI) and Minus Directional Indicator (-DI). Some analysts believe that the ADX is one of the best trend strength indicators available.
The Relative Strength Index (RSI) is one of multiple popular technical indicators created by J. Welles Wilder. Wilder introduced RSI in his book “New Concepts in Technical Trading Systems” which was published in 1978. RSI measures the magnitude and velocity of directional price movements. The data is represented graphically by fluctuating between a value of 0 and 100. The indicator is computed by using the average losses and gains of a stock over a certain time period. RSI can be used to help spot overbought or oversold conditions. An RSI reading over 70 would be considered overbought, and a reading under 30 would indicate oversold conditions. A level of 50 would indicate neutral market momentum. The 14-day RSI is currently sitting at 61.83, the 7-day is at 60.57, and the 3-day is spotted at 61.62.
When it comes to setting up a winning stock portfolio, many investors will select a wide variety of securities in order to minimize risk. This may include choosing a mix of small cap, large cap, value, and growth stocks. Many investors will also include foreign stocks in the portfolio as well. Once the portfolio is set up, investors may realize that they need to rebalance from time to time. Investors may find it extremely helpful to stay up to date and know exactly what holdings they have. When hard earned investing dollars are at stake, individuals may be best served to monitor the portfolio closely at all times. Putting in the extra time and effort to acquire stock market knowledge may help the investor become better prepared for the long haul.
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