Stocks finished a highly volatile week with an overall positive trend, although there are indications that several high-flying stocks may soon experience a downturn. The market saw significant fluctuations during the shortened trading week, initially rising on Monday and Tuesday due to optimism surrounding a potential peace agreement between the U.S. and Iran. However, a Wednesday announcement hinting at a possible rate hike in 2026 sent stocks tumbling, only for them to recover on Thursday, resulting in all major indexes closing the week higher.
Investor behavior this week leaned towards individual stocks, with many seeing sharp increases and pushing their values into overbought levels. Using its stock screener, CNBC Pro identified these stocks with a 14-day relative strength index (RSI), which measures the speed and change of price movements. An RSI above 70 is typically seen as overbought, suggesting a potential pullback, while an RSI below 30 indicates oversold conditions, which could signal a forthcoming rebound.
This week’s standout overbought stocks included Applied Materials and Western Digital. Applied Materials rose nearly 9%, achieving an RSI of 77. Western Digital surged almost 33% with an RSI of 78. The upward traction was partly attributed to President Donald Trump’s announcement on Truth Social that Intel had secured a deal with Apple to produce chips domestically. Additionally, Applied Materials received a boost when Citi reaffirmed its buy rating and raised its price target to $710, suggesting a 15% upside.
Financial institutions Citigroup and Morgan Stanley were also amongst this week’s leaders in terms of overbought status. Citigroup’s stock increased by 2%, while Morgan Stanley’s rose by 4%, leading to respective RSIs of 75 and 74. Both companies reached new 52-week highs on Thursday. Wells Fargo recently increased Citigroup’s price target from $162 to $165, reflecting a similar optimism. Analyst Mike Mayo praised Citigroup’s new focus on “durability, accountability, and execution,” suggesting a shift in strategic direction.
Conversely, several stocks entered into oversold territory this week, most notably Accenture and Fox Corporation. Accenture’s shares fell nearly 25%, leading to an RSI of 23. The decline followed an announcement regarding its acquisition of runZero and NetRise, alongside a majority stake in cybersecurity firm Dragos. Despite the strategic acquisitions, Accenture’s fiscal third-quarter revenue of $18.72 billion fell short of the anticipated $18.78 billion. New bookings also dropped compared to the previous year, disappointing investors and prompting Morgan Stanley to downgrade the company to an equal weight rating, with a new price target set at $177—around 38% above its closing price on Thursday.
Fox Corporation also experienced a significant downturn, losing more than 20% this week and ending with an RSI of 26. The media giant’s stock tumbled after it announced plans to acquire Roku for $160 per share, valued at approximately $22 billion. The financing for this acquisition includes a substantial $12 billion loan, with the company indicating it will cover the cash portion through a combination of new debt and existing cash reserves.
As traders look forward to the coming weeks, the prevailing sentiment towards individual stocks suggests a cautious optimism mixed with an awareness of possible corrections on the horizon.
