Anika Begay
The stock market recovered from a global rout to close higher on Friday, but there may still be an opportunity for some names to rebound. Stocks had a rocky start to the week. Disappointing payrolls data, coupled with the crumbling of the yen’s “carry trade,” not to mention concerns that the Federal Reserve waited too long to cut interest rates, sent major indexes reeling. But after upbeat weekly jobless claims data on Thursday, indexes rose, with the S&P 500 posting its best day since 2022. The broad S&P 500 gained 0.47% on Friday, ending the week down just 0.04%. The Nasdaq Composite closed up 0.51%, while the Dow Jones Industrial Average advanced 0.13% on Friday. With that in mind, Vscek Pro looked at Wall Street’s most overbought and oversold stocks, as measured by their 14-day relative strength index, or RSI. Stocks are considered overbought when their 14-day RSI is above 70, meaning they could be at risk of a pullback. Alternatively, stocks are considered oversold when their RSI is below 30, suggesting a potential buying opportunity. Disney could be due for a rebound higher with an RSI of 27.7. The company’s shares have fallen nearly 4% this week despite the entertainment giant beating Wall Street’s fiscal third-quarter estimates. The stock, which has a consensus rating of buy, is even lower in 2024, down about 4.5%. The company reported that its U.S. theme park business has been hit by a pullback in consumer demand. In an earnings call with analysts, Disney executives said they expect participation to be flat in the quarters ahead. “We’ve seen a little bit of moderation in demand. I wouldn’t call it a significant change, certainly,” said Hugh Johnston, Disney’s chief financial officer. “I would just call it kind of a slowdown that’s more than offset by the entertainment business.” Take-Two Interactive Software also made the cut in the oversold category, with the highest RSI in the group at nearly 28. Shares of the video game maker closed up more than 4% on Friday after the company reiterated its full-year forecast for bookings and profit. While shares are slightly positive for the week, up nearly 1%, the stock has tumbled 10% in 2024. TWWO YTD Take-Two Interactive Software mountain, year to date Other stocks that made the oversold group include artificial intelligence infrastructure game Super Micro Computer and Ulta Beauty. There are also some names that may have gotten too high and could be headed for some losses in the future. Here’s a look at the most overbought names on Wall Street. Kellanova is one of those names. The stock has the highest RSI of the group at 87.2 and has jumped 19% for the week. The stock started the week with huge gains, closing 16% higher on Monday after reports that M&M’s and Snickers maker Mars was considering a takeover of Kellanova. The stock hit a new 52-week high during that session. This year, the stock is up nearly 34%. K YTD Kellanova mountain, year over year Axon Enterprise, maker of the Taser, is another name that has seen huge gains this week. The stock, which has an RSI of 75.3, jumped more than 18% on Wednesday after the company reported second-quarter earnings and revenue topping. The company also raised its full-year revenue forecast. Axon Enterprise now expects revenue this year to be between $2 billion and $2.05 billion, up from a range of $1.94 billion to $1.99 billion. Analysts remain bullish on the stock, with a consensus rating of buy. The stock ended the week up nearly 25% and is up more than 41% this year. AXON YTD mountain Axon Enterprise, YoY Lockheed Martin, which has an RSI of 84.9 and received an upgrade to outperform from the Performing sector at RBC earlier this week, is also in the group. Shares are up 21.7% this year. Northrop Grumman also made the cut with an RSI of 75.
