Mermaid Marine Australia Ltd (MRM.AX): What Are the Charts Indicating?

The Money Flow Index of Mermaid Marine Australia Ltd (MRM.AX) this week has place the shares on the radar as it nears the key 20 or 30 level.  At the time of writing the MFI is dropping below 30 and trending lower for the name.  The Money Flow Index creates a ratio of Positive Money Flow and Negative Money Flow over time and scales it to a number between 0 and 100. The MFI value can be used to evaluate overbought and oversold conditions in a security the index moves above or below a certain reference level. Divergence between MFI and the price direction can also be indicative of a reversal. If price is trending higher and MFI is decreasing over that period, a market top may occur.

Investors often have to face the issue of risk when dealing with the stock market. Creating portfolios that have the largest probability of attaining personal goals might be the course of action for many investors. Realizing that risk is a large part of the investment process can help the investor think realistically. Although completely eliminating risk is not reasonable, taking steps to reduce risk with proper portfolio management is well within reach for any investor. When first starting out, investors may be tempted to follow strategies from friends or colleagues that have dabbled in the markets with some success. Although using someone else’s strategy could work, chances are that eventually each investor will need to tweak the process in order to maximize their chances for success. Often times these lessons may end up being learned the hard way. With proper planning and execution, the hope is that the investor will arm themselves with enough knowledge to avoid mistakes early on.

When undertaking stock analysis, investors and traders may choose to view multiple technical levels in addition to the MFI. Mermaid Marine Australia Ltd (MRM.AX) currently has a 14-day Commodity Channel Index (CCI) of 38.60. Investors and traders may use this indicator to help spot price reversals, price extremes, and the strength of a trend. Many investors will use the CCI in conjunction with other indicators when evaluating a trade. The CCI may be used to spot if a stock is entering overbought (+100) and oversold (-100) territory.

We can also do some further technical analysis on the stock. At the time of writing, the 14-day ADX for Mermaid Marine Australia Ltd (MRM.AX) is 51.60. 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.

Interested investors may be watching the Williams Percent Range or Williams %R. Williams %R is a popular technical indicator created by Larry Williams to help identify overbought and oversold situations. Investors will commonly use Williams %R in conjunction with other trend indicators to help spot possible stock turning points. Mermaid Marine Australia Ltd (MRM.AX)’s Williams Percent Range or 14 day Williams %R currently sits at -60.00. In general, if the indicator goes above -20, the stock may be considered overbought. Alternately, if the indicator goes below -80, this may point to the stock being oversold.

Tracking other technical indicators, the 14-day RSI is presently standing at 40.03, the 7-day sits at 40.98, and the 3-day is resting at 32.45. The Relative Strength Index (RSI) is an often employed momentum oscillator that is used to measure the speed and change of stock price movements. When charted, the RSI can serve as a visual means to monitor historical and current strength or weakness in a certain market. This measurement is based on closing prices over a specific period of time. As a momentum oscillator, the RSI operates in a set range. This range falls on a scale between 0 and 100. If the RSI is closer to 100, this may indicate a period of stronger momentum. On the flip side, an RSI near 0 may signal weaker momentum. The RSI was originally created by J. Welles Wilder which was introduced in his 1978 book “New Concepts in Technical Trading Systems”.

For further review, we can take a look at another popular technical indicator. In terms of moving averages, the 200-day is currently at 0.23, the 50-day is 0.18, and the 7-day is resting at 0.15. Moving averages are a popular trading tool among investors. Moving averages can be used to help filter out the day to day noise created by other factors. MA’s may be used to identify uptrends or downtrends, and they can be a prominent indicator for detecting a shift in momentum for a particular stock. Many traders will use moving averages for different periods of time in conjunction with other indicators to help gauge future stock price action.

As the markets continue to charge to new heights, investors may be trying to calculate where the markets will be moving in the next few months. Many market enthusiasts will be monitoring the current round of company earnings reports. A better than expected earnings period may help give the stock market another boost to even greater levels. At this point in time, investors may be a bit more cautious with stock selection. With so many names near all-time highs, investors may need to crunch the numbers to evaluate which stocks are still a good buy even at current price levels. Investors may also want to zoom out to the sector level and see if they can determine which sectors may be poised to outperform the overall market coming in to the second part of the year. Investors may also be looking at the overall economic conditions and striving to gain a sense of whether everything will align to keeping the bull run going.