Home Capital Group Inc (HCG.TO) shares are on chartist’s watch as the stock is edging below the MACD Histogram zero line. Current levels place the share price around 16.70, while the MACD indicates a bearish trend.
The MACD-Histogram is an indicator of an indicator. In fact, MACD is also an indicator of an indicator. This means that the MACD-Histogram is four steps removed from the price of the underlying security. In other words, it is the fourth derivative of price.
- First derivative: 12-day EMA and 26-day EMA
- Second derivative: MACD (12-day EMA less the 26-day EMA)
- Third derivative: MACD signal line (9-day EMA of MACD)
- Fourth derivative: MACD-Histogram (MACD less MACD signal line)
The base for this indicator is the security’s price. It takes four steps to get from the actual price to the MACD-Histogram. Chartists should keep this in mind when analyzing the MACD-Histogram. It is an indicator of an indicator. Therefore, it is designed to anticipate signals in MACD, which in turn is designed to identify changes in the price momentum of the underlying security.
Investors may be taking a look at some additional technical numbers on shares of Home Capital Group Inc (HCG.TO). The 14-day RSI is currently spotted at 51.60, the 7-day is at 53.98, and the 3-day is sitting at 74.07. The RSI, or Relative Strength Index, is a widely used technical momentum indicator that compares price movement over time. The RSI was created by J. Welles Wilder who was striving to measure whether or not a stock was overbought or oversold. The RSI may be useful for spotting abnormal price activity and volatility. The RSI oscillates on a scale from 0 to 100. The normal reading of a stock will fall in the range of 30 to 70. A reading over 70 would indicate that the stock is overbought, and possibly overvalued. A reading under 30 may indicate that the stock is oversold, and possibly undervalued.
In terms of CCI levels, Home Capital Group Inc (HCG.TO) currently has a 14-day Commodity Channel Index (CCI) of -35.11. 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. The 14-day ADX is 20.03. Many technical chart analysts believe that an ADX reading over 25 would suggest a strong trend. A level 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.
Investors may be studying other technical indicators like 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. Home Capital Group Inc (HCG.TO)’s Williams %R presently stands at -63.91. 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. Looking at some moving average levels on shares of Home Capital Group Inc (HCG.TO), the 200-day is at 14.04, the 50-day is 16.74, and the 7-day is sitting at 16.36. Moving averages can help identify trends and price reversals. They may also be used to help spot support and 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.