Rainbow Rare Earths Limited (RBW.L) shares have seen their Schaff Trend Cycle gradually uptrend this week over the past 3 sessions.  While this indicates nice price momentum, it also suggests that if the reading moves into overbought territory (STC of 70), then the liklihood of a reversal greatly increases.  Investors will be watching very closely over the next few days to see if the trend contiunes or reverses. 

The Schaff Trend Cycle (STC) indicator combines the common indicators of MACD & Stochastic. The benefit of the Schaff Trend Cycle is that it is meant to be quicker than the standard macd and stochastic signals.  The indicator uses similar methods to a MACD i.e uses exponetial moving averages but applies a cycle factor to them. Then the ‘price’ is smoothed using a mofidied Wilders’ smoothing algorithm.  The Schaff Trend Cycle indicator fluctuates between 0 and 100. Readings below 20 are considered oversold while readings above 80 are considered overbought.  The STC indicator fluctuates between 0 and 100. Readings below 20 are considered oversold while readings above 80 are considered overbought.

Investors may be scouring the exchanges for the next breakout stock. With the next earnings season in focus, investors will be keeping their eyes open for names that have upside potential. Tracking earnings results can help the investor see how healthy the company is. Investors may choose to research companies that produce large earnings beats. Taking the time to fully research the fundamentals can help the investor start piecing together the puzzle. Although many investors may not feel comfortable making trades around earnings, they can prepare for the aftermath and set up a plan to proceed once the market settles. 

Investors are paying close attention to some additional technical levels for shares of Rainbow Rare Earths Limited (RBW.L). A popular tool among technical stock analysts is the moving average. Moving averages are considered to be lagging indicators that simply take the average price of a stock over a specific period of time. Moving averages can be very useful for identifying peaks and troughs. They may also be used to help the trader figure out proper support and resistance levels for the stock. Currently, the 200-day MA is sitting at 10.36, and the 50-day is 3.17.

The 14-day ADX for Rainbow Rare Earths Limited (RBW.L) is currently at 41.42. In general, and ADX value from 0-25 would represent an absent or weak trend. A value of 25-50 would support a strong trend. A value of 50-75 would signify a very strong trend, and a value of 75-100 would point to an extremely strong trend. Checking in on some other technical levels, the 14-day RSI is currently at 36.55, the 7-day stands at 37.79, and the 3-day is sitting at 36.34. The Relative Strength Index (RSI) is a momentum oscillator that measures the speed and change of stock price movements. The RSI was developed by J. Welles Wilder, and it oscillates between 0 and 100. Generally, the RSI is considered to be oversold when it falls below 30 and overbought when it heads above 70. RSI can be used to detect general trends as well as finding divergences and failure swings.

At the time of writing, Rainbow Rare Earths Limited (RBW.L) has a 14-day Commodity Channel Index (CCI) of -118.12. Developed by Donald Lambert, the CCI is a versatile tool that may be used to help spot an emerging trend or provide warning of extreme conditions. CCI generally measures the current price relative to the average price level over a specific time period. CCI is relatively high when prices are much higher than average, and relatively low when prices are much lower than the average. Investors may be watching other technical indicators such as the Williams Percent Range or Williams %R. The Williams %R is a momentum indicator that helps measure oversold and overbought levels. This indicator compares the closing price of a stock in relation to the highs and lows over a certain time period. A common look back period is 14 days. Rainbow Rare Earths Limited (RBW.L)’s Williams %R presently stands at -97.78. The Williams %R oscillates in a range from 0 to -100. A reading between 0 and -20 would indicate an overbought situation. A reading from -80 to -100 would indicate an oversold situation.

Investors are always looking to gain any possible advantage in the stock market. Knowing the various risk and return possibilities for various types of stocks can be critical to positive performance. Creating a balanced equity portfolio may be the essential first step when thinking about diving into the equity markets. Investors may come from all different types of backgrounds, and they may face completely different situations. Each investor may need to identify their objectives and try to figure out what’s best for their specific situation. Investors may want to take a conservative approach to the markets. Others will be looking to go in full throttle with a very aggressive plan. Whatever the choice, it is important to note that picking stocks based on previous returns will never guarantee future returns. Investors have many choices they can make when looking to purchase stocks. Figuring out levels of risk, expectations of returns, and the overall investment time horizon can all play a big part in crafting the initial plan.

Receive News & Ratings Via Email - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings with MarketBeat.com's FREE daily email newsletter.