These overbought stocks could be due for a pullback following market's big week
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A handful of well-known stocks were snatched up this week at levels that could indicate a correction ahead. The three major indexes are poised to end this week, which was largely centered around the Federal Reserve’s final 2023 meeting, with notable gains. Those moves came as investors cheered signals from the central bank indicating cuts to interest rates were on the horizon. If these advances hold through Friday’s close, it would mark the seventh straight winning week for the S & P 500 , a streak length not seen since 2017. It would be the ninth straight positive week for the Dow , which hasn’t happened since 2019. Investors snapped up some stocks more than others amid the rally — and those names could now experience a pullback after their jumps. CNBC Pro used FactSet data to screen for the most overbought and oversold names in the S & P 500, based on their 14-day relative strength index, or RSI. The relative strength index, which measures the magnitude and speed of price moves, is a popular metric used to evaluate whether shares are overbought or oversold. A stock with a 14-day RSI below 30 is considered oversold, suggesting that it could be a promising entry point for investors, while those with a 14-day RSI above 70 are considered overbought, signaling a possible selling opportunity. Here’s some of the most overbought names in the last week: Financial stock Invesco and plane maker Boeing were the most overbought with RSIs above 98. Invesco has rallied 16% since Monday, putting it on pace to see its biggest gain over a trading week since late 2022. A sizable chunk of this week’s advance came on the back of an upgrade to outperform from market perform by investment bank Keefe, Bruyette & Woods. “We believe the company is positioned well for the improving market and flow backdrop and trades at a discounted 8x our 2025e EPS,” analyst Michael Brown wrote to clients on Wednesday. “Looking to 2024, IVZ is positioned well to continue capturing passive flows, and we believe the potential on the fixed income side is underappreciated.” But the upgrade put the firm out of Wall Street’s majority. Less than one out of every five analysts rates the stock a buy, with an average price target implying shares will tumble nearly 14% over the next year, according to FactSet. Invesco shares are still down about 2% on the year. Meanwhile, Boeing has climbed about 8% this week. The company announced leadership appointments over the course of the week, with Stephanie Pope tapped as operations chief and Brian Moran as sustainability chief . If the gains hold through Friday’s close, it would mark the seventh straight winning week. The stock has soared more than 38% this year. Analysts are more optimistic about Boeing, with more than two out of every three holding a buy rating. Still, the average analyst expects shares to inch lower by almost 0.3% in the next 12 months following recent gains. FedEx , Royal Caribbean and Caterpillar were also among the most overbought stocks. On the other end of the spectrum, Arch Capital Group was the most oversold with an RSI below 17. That means the stock, which has slid more than 7% the week, could be due for a bounce. Despite the tough week, the stock is still up by about 17% in 2023. More than seven out of every 10 analysts rate the stock a buy, with an average price target reflecting an upside of nearly 28%. Fellow finance stocks Everest Group and Arthur J. Gallagher were also among the most oversold. Here’s the full list: Further down the list, Starbucks was also considered oversold with an RSI of 27.5. Still, the stock is poised to end the week up by almost 1%. Last week, Starbucks was able to snap a historic losing streak as investors worried about the state of the consumer in the U.S. and the company’s performance in China. Shares are tracking to end 2023 down almost 2%, extending losses after 2022’s drop of more than 15%. Less than two out of every five analysts recommend buying the stock, per FactSet. Still, the average price target implies a bounce of nearly 18%, which would mark a reprieve following the multiyear rout. — CNBC’s Michael Bloom and Fred Imbert contributed to this report
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