16 Aug These stocks are overbought with S&P 500 near record highs and are vulnerable to pullback
Stocks such as eBay and Intel are among Wall Street’s most overbought names this week and could see a pullback ahead, according to one popular technical metric. Each of the three major U.S. indexes hit all-time highs this week. The records followed improved investor sentiment after fresh consumer inflation data supported hopes for an interest rate cut from the Federal Reserve’s September meeting. The S & P 500 and Nasdaq Composite gained 0.9% and 0.8% week to date, respectively, while the 30-stock Dow Jones Industrial Average added 1.7%. After this week’s rally, we used the CNBC Pro stock screener tool to identify the most overbought stocks on the Street as measured by their 14-day relative strength index, or RSI. Stocks with a 14-day RSI above 70 are generally considered overbought, meaning they could see shares decline in the future. The table below shows stocks with an RSI above 70 that have also risen at least 5% week to date, as of Friday morning. Biopharmaceutical company Incyte and e-commerce platform eBay topped the oversold list with RSIs of about 80 and 77, respectively. Incyte shares gained 11% this week. The stock is up nearly 26% year to date. Wells Fargo recently upgraded shares to overweight and set a $89 price target, saying the stock’s setup appears favorable ahead of Incyte’s expected update on its myelofibrosis therapy in the fourth quarter. The firm expects the news “will be positive.” Myelofibrosis is rare bone marrow disorder. Shares of eBay jumped 8% this week, meanwhile, bringing its year-to-date gains to more than 62%. EBay on July 30 reported an earnings and sales beat for its second quarter, and also provided an upbeat forecast for the current period. EBAY 1Y mountain EBay stock performance over the past year. Intel, with an RSI of 71.3, logged a week-to-date gain of 23% — its best week in more than 25 years. It’s a sharp swing for the struggling stock, which saw its worst annual performance on record last year after it lost 60% of its value. The chipmaker’s steep climb followed a Bloomberg report on Thursday that said the Trump administration is weighing whether the U.S. government should take a stake in Intel to support its efforts to expand U.S. manufacturing. Following the report, D.A. Davidson head of technology research Gil Luria told CNBC that government intervention in Intel is “essential” to protect U.S. national security. Sentiment remains shaky on Intel. Of the 46 analysts covering the company, 39 rate it a hold, per LSEG. Only two analysts have a strong buy or buy rating on the name.