Humana’s stock has seen a remarkable surge, more than doubling since the stock market’s low point during the U.S.-Iran conflict on March 30. However, this rally may have reached its peak, as the Louisville-based health insurer topped the list of overbought stocks in the S&P 500 by the end of the week.
The broader U.S. indexes faced a volatile trading landscape over the past five sessions, with many investors shifting their focus away from semiconductor stocks in anticipation of geopolitical developments linked to U.S. negotiations with Iran. Additionally, market reactions to the SpaceX IPO on Friday contributed to the choppy trading environment. Nevertheless, the S&P 500 concluded the week with gains, marking its 10th increase in 11 weeks.
Despite this week’s fluctuations—including declines on Tuesday and Wednesday after last week’s nearly 3% drop—numerous stocks began to gain momentum, entering overbought territory. Utilizing CNBC Pro’s stock screener, the analysis focused on stocks measured by their 14-day relative strength index (RSI). A reading above 70 indicates an overbought condition, suggesting a potential downturn, while an RSI below 30 signifies that a stock may be oversold and poised for recovery.
Among the top overbought companies in the S&P 500 this week are three healthcare firms: Humana, CVS, and Cardinal Health. Since the end of March, Humana has skyrocketed, while CVS has witnessed a 45% increase in the same timeframe. Cardinal Health has also performed well, experiencing more than a 20% rise since mid-May.
In a challenging week for the broader market, UBS analysts noted that the healthcare sector’s performance was relatively stable. Strategists led by chief investment officer Ulrike Hoffmann-Burchardi pointed out that the sector has outperformed the S&P 500 on 85% of the days when the benchmark fell by 1% or more over the past year.
KLA Corporation also appeared to be overbought after its stock climbed nearly 30% this week. The semiconductor equipment maker surged by almost 13% on Thursday, spurred by Oracle’s promising outlook on capital spending and heightened demand for chips.
In another notable performance, J.M. Smucker Company, known for its Jif peanut butter and Cafe Bustelo coffee, increased by 11% this week after reporting solid earnings. Bank of America analyst Peter Galbo raised his price target for the Ohio-based company to $132, suggesting a possible 14% upside potential from Friday’s closing price. He expressed expectation for Smucker’s shares to continue outperforming those of its center store food peers.
Conversely, fewer stocks fell into the oversold category following the market’s recent strength. Among those were Meta Platforms, the parent company of Instagram and Facebook, which dropped 5% last week and is down 11% for June, and AutoDesk, which saw a 14% decline. Adobe also entered oversold territory after plummeting 6% on Friday, triggered by the departure of its chief financial officer Dan Burn and a forecast of subdued growth in annual recurring revenue.
