The Heat Map display in Market Analyser is a fantastic way to identify the hot shares on any given day, and also the shares that are not so hot. The Heat Map takes an enormous amount of data and presents it in a simple-to-view format. To access this feature go to the Market Analyser Menu button, select Tools, then Heat Map. Once you are in the Heat Map window you can select the sector you want to examine more closely with a click on the left hand menu.
The Heat Map displays price movements for the day as well as the volume traded. The higher the volume is, the larger the size of the box, and the more movement, the brighter the colour. Today the strongest performer in the Materials sector was Renison (RSN). Simply double click on this square and you will see a chart of RSN displayed in Market Analyser. RSN (shown in the chart below) has a huge volume spike showing in the chart today, but it is also a very low-priced share, which means strong moves are more likely to occur. The shape of the candlesticks pattern here shows evidence of a share that normally trades in very low volumes, and on some days there is no volume at all.
Often you will find the biggest movers among these low volume shares, or illiquid shares as they are often called, but it is usually not practical to trade these shares. Buying can be easy, but trying to sell when there are no interested buyers can be very costly. You can exclude an individual share from the Heat Map, with a right click on the box of the share you wish to exclude. This way you could drop out RSN and redraw the map to identify other hot shares. You can reload the sector to reinstate all the shares.
There are two other shares in the top right corner of the Heat Map that have had strong moves today: Paperlinx (PPX) and Cougar (CGM). Taking a look at the charts of these shares, with a double click on the appropriate box in the Heat Map, provides an interesting perspective.
Cougar has been climbing higher more rapidly each day, resulting in a parabolic move to the upside. Buying after such a strong move has a very poor risk reward. While the share can continue higher, the risk is that the share pulls back sharply, resulting in a losing trade. Paperlinx would appear to have broken out of a significant down trend and is climbing higher. You can do more research on each of these shares by checking out if there were any related announcements made for these companies today.
The Heat Map can also be applied to any watchlist you have created, allowing you to identify the hot shares among the shares you wish to follow. Right click on the watchlist, and then click Create Heat Map. It’s that easy to identify which shares are hot and which are not with Market Analyser.
By Jeff Cartridge