Benzinga - by MarketBeat, Benzinga Contributor.
Amidst the ongoing surge led by the semiconductor sector, the Artificial Intelligence revolution, and Nvidia Corp. (NASDAQ: NVDA), which is steering the S&P 500 to new heights, several overbought scenarios have developed in individual stocks. These scenarios may have sparked investor concerns over potential overvaluations, resulting in pullbacks and corrections in select stocks.
Numerous stocks have shown extreme overbought signals, with the market hovering near record levels, as the Relative Strength Index (RSI) indicates. This measure evaluates the recent magnitude of price changes to determine overbought or oversold conditions within a specified timeframe.
In light of this, stocks such as General Electric (NYSE: GE), Chipotle Mexican Grill (NYSE: CMG), FedEx (NYSE: FDX), and The Gap (NYSE: GPS) have surfaced as overbought contenders within the U.S. market. This signals a potential predisposition to pullbacks, as investors may opt to lock in profits.
Meanwhile, the broader market continues to ascent to new highs, with the SPY ETF closing just 0.55% below its all-time peak last week and the QQQ tech sector ETF concluding the week merely 0.6% shy of its all-time high. So, while the overall market melts higher, could these four overbought stocks face imminent pullbacks? Let's delve deeper to find out.
Chipotle Mexican Grill (NYSE: CMG)
The Gap (NYSE: GPS)
Remarkably, despite its recent upward momentum, the stock's price-to-earnings ratio remains modest at just 20.96. However, the RSI now suggests that GPS has entered overbought territory, with the RSI at 82.80, signaling a potential pullback on the horizon.
General Electric (NYSE: GE)
FedEx (NYSE: FDX)
The company's recent earnings report released on March 21st, 2024, was a significant catalyst for these gains. In this report, the shipping service provider exceeded expectations, reporting earnings per share of $3.86 for the quarter, surpassing analysts' consensus estimates by $0.37. However, despite the positive gains, the stock faces resistance near $285, compounded by an elevated RSI of 84.35, indicating overbought conditions and rendering it susceptible to a potential pullback.
The article "4 Overbought Household Names, Time for a Pullback?" first appeared on MarketBeat.