31 May These stocks are overbought after a strong May and could pull back
A few stocks, including a handful of semiconductor giants, could take a hit after riding the market’s rebound in May. The market closed out a big winning month with the S & P 500 climbed more than 6%, its largest monthly advance since late 2023 and leaving the benchmark little changed on the year. The Nasdaq Composite surged 9.6% this month, while the 30-stock Dow rose nearly 4%. Much of the gain was powered by a softening in the trade war after the U.S. and China agreed to temporarily step back from the brink and a trade deal between the U.S. and UK sparked hopes more deals could be in the offing. Heading into June, sentiment remains uneasy as investors are buffetted by daily tariff-related headlines and await news of any progress in trade relations between the U.S. and China, the world’s two largest economies. CNBC looked for the most overbought and oversold stocks on Wall Street by weighing their 14-day relative strength index, or RSI, a momentum indicator, using data from LSEG. An RSI above 70 suggests a stock could be overbought and could be due for a near-term decline, while an RSI below 30 suggests a stock could be oversold and see a short-term rebound. Johnson Controls was the most overbought name this week, with an RSI of 86.9. The company, which manufactures and installs commercial HVAC systems, soared 20.8% this month and is higher by more than 28% year to date. Johnson Controls in early May reported fiscal second-quarter earnings and revenue above analysts’ estimates, according to FactSet. Deutsche Bank upgraded the stock to buy in a May 11 note to clients, citing “significant operational improvement opportunities” at Johnson Controls since a new chief executive officer took over in March. Semiconductor company Broadcom , which popped 26% in May, also turned up as overbought with an RSI of 79.3. The rally in Broadcom comes ahead of the company’s second-quarter earnings expected on June 11. Analysts polled by LSEG have a consensus price target about 1% below where it’s trading, suggesting its valuation is running too high. Broadcom — known for its custom Application-Specific Integrated Circuit chips — is among several technology names that have rebounded in the recent market comeback. Other stocks that look overbought include GE Aerospace and Intuit , both of which also made the overbought segment last week . Shares of GE Aerospace and Intuit jumped 22% and 20% in May, respectively. UnitedHealth continues its recent run of appearing deeply oversold with a current RSI of about 20. The stock tumbled another 26.6% this month after sliding 21.4% in April. Cooper Companies and Copart were also oversold, with RSI’s of 24.5 and 20.9, respectively. Shares of Cooper Companies, a medical devices and contact lens maker, were down 16.4% this month, bringing this year’s loss close to 26%. Shares retreated after Cooper lowered its full-year organic growth forecast, even as second-quarter revenue and profit beat expectations.