Investors are being advised to remain cautious amid recent gains in the stock market, particularly among chipmakers and various other sectors. This week witnessed a notable surge in the three major indexes, with the S&P 500 achieving its largest one-week gain since May. The Nasdaq Composite marked an impressive milestone, reaching its 13th consecutive day of gains—the first occurrence of its kind since 1992.
However, not all sectors performed equally. The S&P 500’s information technology sector saw a substantial increase of 8% this week, whereas the energy sector faced a decline of 3.5%. Such disparities highlight the uneven contributions to the overall market rally.
To evaluate potential investment opportunities, many traders utilize the relative strength indicator (RSI), a metric that indicates whether stocks are overbought or oversold based on recent price movements. An RSI reading above 70 suggests that a stock may be overbought and could be due for a correction, while an RSI below 30 indicates that a stock may be oversold, presenting a potential entry point for investors.
Given the significant market gains observed recently, CNBC Pro has compiled a list of overbought stocks. At the top of this list is Advanced Micro Devices (AMD), which boasts an RSI above 80. The stock has soared more than 13% this week alone, marking its sixth consecutive week of gains and bringing its total rise for 2026 to nearly 30%. Despite some concerns about a potential pullback, a majority of analysts surveyed by FactSet maintain buy ratings for AMD. However, predictions suggest that the stock may have limited further upside, with analysts estimating an average additional gain of only around 5%.
AMD isn’t the only semiconductor firm attracting attention. Other chip stocks, including ON Semiconductor, Intel, and Broadcom, also reported RSIs in the high 70s, signaling similar overbought conditions.
In addition to technology stocks, Synchrony Financial made the list with an RSI nearing 74. The company’s shares increased more than 8% this week, although they remain down over 6% year-to-date. Optimism exists on Wall Street regarding a potential rebound, as most analysts hold a buy rating and anticipate the stock could appreciate by more than 8% in the coming year, according to FactSet.
Investors should approach these rallying assets with caution and keep an eye on the potential for pullbacks as the market evolves.
