Compumedics Ltd (CMP.AX) AroonUp Technicals Showing Momentum Building

Compumedics Ltd (CMP.AX)’s Aroon Up level has reached above the key level of 70, indicating a strong upward trend for the security. 

The Aroon indicator was developed by Tushar Chande in 1995. Aroon is used to measure the presence and strength of trends. Aroon can be drawn either as two lines, the Aroon Up and Aroon Down. The Aroon Up and Aroon Down lines oscillate between 0 and 100.

Aroon Up for a given time period is calculated by determining how much time (on a percentage basis) elapsed between the start of the time period and the point at which the highest closing price during that time period occurred. Aroon Up will be 100 when the instrument is setting new highs for the period. Conversely, Aroon Up will be 0 if the instrument has continually dropped throughout the period. Aroon Down is calculated in a similar manner, expect looking for lows as opposed to highs.

As any seasoned investor knows, markets can move up or down in the blink of an eye. Investors who attempt to beat the market without creating a plan may find themselves grasping at straws down the line. Building a plan that included the right level of risk may be different for every individual. Managing risk and staying on top of the stock portfolio can help investors ride out the storm when it eventually rolls in. Anybody who manages their own portfolio knows that it can be extremely challenging at times. Finding a consistent process that works when markets become volatile can be a big help to the investor. Controlling emotions and conducting the necessary research can help the investor make the difficult decisions when they crop up.

Turning to some additional technical indicators, at the time of writing, the 14-day ADX for Compumedics Ltd (CMP.AX) is standing at 28.21. Many chart analysts believe that an ADX reading over 25 would suggest a strong trend. A reading under 20 would suggest no trend, and a reading from 20-25 would suggest that there is no clear trend signal.

What Is ADX?

The Average Directional Index or ADX. The ADX was created by J. Welles Wilder to help determine how strong a trend is. In general, a rising ADX line means that an existing trend is gaining strength. The opposite would be the case for a falling ADX line.

Looking further at additional technical indicators we can see that the 14-day Commodity Channel Index (CCI) for Compumedics Ltd (CMP.AX) is sitting at 184.83. CCI is an indicator used in technical analysis that was designed by Donald Lambert. Although it was originally intended for commodity traders to help identify the start and finish of market trends, it is frequently used to analyze stocks as well. A CCI reading closer to +100 may indicate more buying (possibly overbought) and a reading closer to -100 may indicate more selling (possibly oversold).

Moving averages can help spot trends and price reversals. They may also be used to help find support or resistance levels. Moving averages are considered to be lagging indicators meaning that they confirm trends. A certain stock may be considered to be on an uptrend if trading above a moving average and the average is sloping upward. On the other side, a stock may be considered to be in a downtrend if trading below the moving average and sloping downward. Shares of Compumedics Ltd (CMP.AX) have a 7-day moving average of 0.39. Taking a glance at the relative strength indictor, we note that the 14-day RSI is currently at 78.50, the 7-day stands at 88.09, and the 3-day is sitting at 97.57.

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.

Investors may be trying to gauge the current business cycle phase and how that could potentially impact the portfolio. Business cycles can be one way to analyze portfolio performance. Early on in the cycle, profits tend to grow rapidly, sales tend to improve, and activity rebounds. In the middle of a cycle, growth may be peaking, strong credit growth may still be seen, and policy may swing neutral. Toward the later stages, growth may be moderate, earnings may come under pressure, and credit may tighten. Heading into a period of recession, credit may completely dry up, profits may decline sharply, and there may be policy easing. Investors will often have to adjust portfolio holdings that reflect the current state of a business cycle.