These stocks, including Oracle, are among the most overbought on Wall Street

Several notable stocks appear poised for potential pullbacks after experiencing significant gains recently, according to widely used technical indicators. This comes amidst a backdrop of geopolitical tensions that shook the markets. On Friday, a major escalation between Israel and Iran saw Israel launch airstrikes—the most extensive attack on Iran since the Iran-Iraq War in the 1980s. These developments triggered a swift shift among investors, who moved away from stocks into safe-haven assets such as the U.S. dollar and gold, leading to a dip in equity markets.

The S&P 500, for instance, ended Friday’s trading session down over 1%, bringing its losses for the week to 0.4%. Similarly, the Nasdaq Composite and the Dow Jones Industrial Average reported declines of 0.6% and 1.3%, respectively, for the week. Such movements underscore the ongoing volatility in the financial landscape, particularly as investors react to external pressures.

Using a stock screener tool, CNBC Pro identified several overbought and oversold stocks by calculating their 14-day relative strength index (RSI). An RSI above 70 typically indicates a stock may be overbought and could see a pullback soon, while an RSI below 30 suggests a stock might be oversold and could rebound. This week, Oracle emerged as the most overbought stock in the S&P 500, showcasing an RSI of around 90.4. Oracle’s shares saw a remarkable surge of almost 8% on Friday, achieving an all-time high and following a 13% rally on Thursday. Overall, Oracle’s stock skyrocketed by 24% throughout the week.

The impressive gains were aided by Oracle’s recent fiscal fourth-quarter results that surpassed analysts’ expectations. CEO Safra Catz highlighted that cloud infrastructure revenue is projected to rise by more than 70% in fiscal 2026, suggesting that growth could accelerate considerably moving forward. Analyst consensus places Oracle’s average price target around $205, which indicates that the stock may face nearly a 5% decline from its closing level on Friday, although many analysts expect their targets to rise following the positive earnings report.

Another stock that made headlines was Micron Technology. With an RSI of 85.1, Micron is also considered overbought, having witnessed its shares jump over 6% in the past week. This marked its third consecutive weekly gain, resulting in an impressive year-to-date increase of more than 37%. However, the stock experienced a slight downturn on Friday, interrupting a remarkable nine-day winning streak. On Thursday, Micron unveiled ambitious plans to invest approximately $200 billion in U.S. semiconductor manufacturing, which is expected to create around 90,000 direct and indirect jobs.

On the flip side, J.M. Smucker appeared on the week’s oversold list, with an RSI hovering around 27. Despite most Wall Street analysts rating Smucker as a ‘hold’, the consensus price target of $113 suggests an upside potential exceeding 18% from Friday’s closing price. The stock faced downward pressure recently, experiencing a sharp 14% drop after its fiscal fourth-quarter revenue of $2.14 billion came in below the anticipated $2.18 billion, even though earnings did exceed expectations. Additionally, Smucker’s full-year earnings guidance fell short of market predictions, leading to its shares declining in seven of the past eight weeks.

Another notable underperformer has been PG&E Corporation, which saw a staggering 13% drop this week, marking its fourth successive weekly decline. Currently holding an RSI of 20.6, PG&E’s stock has plummeted 32% year-to-date, contrasting with a 1.6% rise in the S&P 500. The utility company has faced considerable challenges in recent months, which have negatively impacted its stock performance.

The financial markets reflect a complex interplay of external geopolitical events and internal corporate performance metrics. Investors remain cautious, thus turning to safer investments as uncertainty prevails in the broader economic landscape. The narrowing focus on companies such as Oracle and Micron exemplifies the volatility and potential opportunities within the market. Both companies enjoy strong fundamentals, driven by innovative growth trajectories such as cloud services and semiconductor manufacturing, yet face pressures typical of overbought conditions.

As the situation evolves, analysts and investors alike will closely monitor these and other stocks for signs of market correction or recovery. Keeping a keen eye on the RSI indicators might offer valuable insights into potential trends and reversals, allowing for more informed investment decisions in the weeks to come.

In summation, the financial markets are experiencing a rollercoaster of emotions as tensions escalate internationally. Stocks like Oracle and Micron are currently celebrated for their robust performance, yet their overbought status raises caution flags. Conversely, companies like J.M. Smucker and PG&E signal a contrasting narrative of struggle and potential recovery. The ability to balance these dynamics will be crucial for navigating the complex investing landscape in the near future.

Source link