Investor Sentiment Shifting Amid Rate Hike Speculation: This Week Overbought and Oversold Stocks in Focus

John Smith

Investors are navigating a complex landscape as they gauge the potential for an additional rate hike by the Federal Reserve later this year. Last week, Wall Street experienced losses, with major indices like the Nasdaq Composite, S&P 500, and Dow Jones Industrials all closing lower.

To help investors make informed decisions, CNBC Pro used FactSet data to identify overbought and oversold stocks in the S&P 500 based on their 14-day Relative Strength Index (RSI).

The Relative Strength Index, which measures price movement’s magnitude and speed, is a widely used metric to determine whether stocks are overbought (RSI above 70) or oversold (RSI below 30).

Overbought Stocks

  1. Intuit: The financial software company behind TurboTax and Credit Karma boasts a staggering 14-day RSI above 95. Despite this, over two-thirds of analysts consider it a buy, with Intuit’s shares gaining almost 42% so far in the year. Strong earnings and investments in artificial intelligence have boosted investor confidence.
  2. IBM: IBM, with an RSI of 85, is another overbought stock, even though only about 28% of analysts rate it as a buy. The average price target suggests a slight downside, but the shares have already added almost 5% in 2023.
  3. Accenture: This professional services company has an RSI of over 83, and nearly 56% of analysts rate it as a buy. The company’s focus on AI investments and a “stealthy way to think about AI” has garnered investor interest.
  4. Baker Hughes, Autodesk, and Verisk Analytics: Other overbought names in the S&P 500 include Baker Hughes, Autodesk, and Verisk Analytics, all with RSIs in the mid-80s.

Also See: Don’t Leave Money on the Table: Data Points to Age 70 for Optimal Social Security Payouts

Oversold Stocks

  1. Alaska Air Group: With an RSI below 17, the airline company is considered oversold. 80% of analysts rate it as a buy, projecting a significant upside of +60%.
  2. Walgreens Boots Alliance: The drugstore chain operator’s RSI is below 9, making it one of the most oversold companies. However, it has more than 40% upside based on analysts’ average price target, despite struggles related to declining demand for Covid tests and vaccines.
  3. Viatris: Formed by the 2020 merger of Mylan and Pfizer’s Upjohn business, Viatris is the most oversold company in the S&P 500 with an RSI below 7. Analysts’ consensus price target implies over 23% upside.
  4. Dollar Tree, Dollar General, and FMC: Discount retailers Dollar Tree and Dollar General, along with chemical manufacturer FMC, are also among the most oversold companies in the S&P 500.
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John Smith is a veteran stock trader with over 10 years of experience in the financial markets. He is a widely followed market commentator known for his astute analysis and accurate predictions. John has authored multiple bestselling books explaining complex market concepts in simple terms for novice investors looking to grow their wealth through strategic trading and long-term investments.