JSE’s first listing for 2021 – Montauk – drops 15% on oversold report

US-based Montauk Renewables dropped more than 15% in early trade on the JSE following a BNK Invest report that the stock was entering oversold territory.

By 1pm on the JSE, the stock was trading down 10.64% at R105,01, more than 100% lower than its listing price of R215 in January this year. Montauk is one of the largest US producers of renewable natural gas and has its primary listing on the Nasdaq.

Both the JSE All Share and Top-40 indices were trading in the red, down 0.40% and 0.53% respectively.

According to the report, shares of Montauk entered into oversold territory when it hit an RSI (Relative Strength Index) reading of 25.7 and changed hands as low as $7.01 per share in Nasdaq trade on Tuesday. By comparison, the current RSI reading of the S&P 500 ETF is 67.4. “A bullish investor could look at MNTK’s 25.7 RSI reading today as a sign that the recent heavy selling is in the process of exhausting itself, and begin to look for entry point opportunities on the buy side,” wrote BNK Invest.

BNK Invest explains that an RSI reading, a technical analysis indicator, measures the level of fear in a given stock by measuring momentum on a scale of zero to 100. A stock is considered to be oversold if the RSI reading falls below 30.

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