As per a widely used measure, certain stocks such as Cintas and Chipotle Mexican Grill may encounter declines with the market reaching overbought levels. Investor confidence has remained strong in recent weeks after the US saw little indication of potential interest rate hikes in the future from October’s inflation data. The three major indices are set to achieve weekly gains, marking the third successive positive week. By Thursday’s close, the S&P 500 and the tech-heavy Nasdaq Composite had increased by over 2%, while the Dow Jones Industrial Average was on track to gain approximately 1.9%. However, according to Wolfe Research, the broader market is on the brink of entering overbought territory. This signals that the recent market rally may be excessively prolonged in the short term, necessitating more time to absorb these gains. CNBC Pro, utilizing FactSet data, has identified the most overbought and oversold stocks in the S&P 500 based on their 14-day relative strength index (RSI). Stocks with a 14-day RSI exceeding 70 are considered overbought and vulnerable to downside risks. A higher RSI indicates heightened investor optimism in the near term. Conversely, a reading below 30 typically suggests that a stock is oversold and primed for a short-term rebound, with a low RSI indicating dampened sentiment towards a stock. Here are some of the most bought stocks in the S&P 500: The leading name on the list with a 14-day RSI of 98.5 is the uniform supplier Cintas. The stock has registered a 3% increase this week and has seen a rise of about 22% during the year. Analysts’ average price target estimates project a 3% decline by Thursday’s close. Approximately 43% of the analysts covering the company have assigned it a buy rating. Evaluating the long term, Truist Securities issued a buy rating and a $625 price target for Cintas on Monday, predicting potential margin increase through a return to normalized pricing and reduced costs in labor and materials. Truist analyst Jasper Bibb remarked, “Valuations are relatively rich, but we believe the premium multiple is justified by the quality of the business, growth prospects, and management’s track record of value creation.” Another company whose stock price rose this week was American Express, which may experience a decline. Analysts anticipate an over 8% increase in the company’s shares over the next 12 months. The financial services giant’s shares have grown by 4.6% this week, with its recent gains attributed to the third-quarter earnings and revenue growth announced on October 20. The executives reiterated their confidence in the company’s strong full-year guidance. Barclays upgraded the company to an overweight rating on Wednesday while TD Cowen also revised its performance assessment to market perform on October 31. Chipmaker Qualcomm, with a 14-day RSI of 94.98, is also categorized as overbought. Analysts predict a 7.8% upside to the stock price and rate it as a buy by just over 50%. The company’s shares have climbed by over 16% in the past month, driven by a better-than-expected performance in sales and earnings for its fiscal fourth quarter. Qualcomm, a significant processor manufacturer for the majority of high-end Android devices as well as lower-end phones, has also exhibited signs of early stabilization in the demand for its handsets. Other overbought names include fast-food chain Chipotle Mexican Grill and industrial companies TransDigm Group and Ingersoll Rand. Here are some of the most sold names in the broader market: Oil and gas companies APA Corp and Marathon Oil are listed as oversold with RSI scores of 23.3 and 28.9, respectively. According to the average price targets of the analysts, APA Corp is anticipated to increase by 38.1%, the highest on the list, while Marathon Oil could see an approximate 37% rise. APA has dropped by 13% in the last month, whereas Marathon has experienced a nearly 11% decline. Marathon’s third-quarter earnings and revenue, disclosed on November 1, exceeded the expectations of analysts according to FactSet. The company also announced a 10% quarterly dividend increase to 11 cents per share, with shares rising by 3% on Friday. Recent increases in US crude inventories alongside stagnant production have caused a decline in oil prices. Paycom Software, with an RSI of 25.7 and less than a third of analysts recommending it as a buy, is another oversold name. The company’s shares have risen by 2.2% this week. UBS has recently provided a buy rating and a $235 price target for the payroll technology provider, citing the company’s underperformance year-to-date as an attractive long-term investment prospect. The firm believes that Paycom’s performance has improved due to potential in pricing and international expansion. Stocks entering oversold territory include supermarket operator Kroger, Kotera Energy, and cybersecurity company Cisco Systems.
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