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The stock market is enjoying its best week of 2023, but some names may have gotten ahead of themselves. The Dow Jones Industrial Average is up 5% for the week. The S & P 500 and tech-heavy Nasdaq Composite are 5.6% and 5.8% higher, respectively, and are on pace for their highest weekly gains since November 2022. Several consumer names, including McDonald’ s and Kraft Heinz , jumped on the back of their quarterly earnings reports this week. Other big names such as Airbnb , PayPal , and pharmaceutical giants Pfizer and Amgen also reported their earnings and saw their stocks rise. That said, some stocks have become overbought during this week’s rally — and could be due for a pullback. CNBC Pro screened FactSet to find the most overbought and oversold names in the S & P 500 based on their 14-day relative strength index, or RSI. A stock with a 14-day RSI greater than 70 is considered to be overbought and at risk of a pullback. A high RSI typically indicates near-term investor sentiment on a stock is becoming too optimistic. Conversely, a reading lower than 30 typically means a stock is oversold and may be ready to stage at least a short-term bounce, with a low RSI usually indicating souring sentiment around a stock. Here are some of the most overbought names. Fast food giant McDonald’s made the overbought list with an RSI of 80.16. Analysts estimate the stock has 14.7% upside potential, with about 64% of those covering the stock rating it a buy. Shares have jumped nearly 5% after it posted a quarterly earnings and revenue beat on Monday. Although the company’s U.S. traffic fell for the first time in 2023, it managed to gain market share among middle- and high-income consumers. Evercore ISI analyst David Palmer told CNBC’s ” Squawk on the Street ” on Monday that McDonald’s is in “a great spot competitively to continue to gain share” in both U.S. and important overseas markets, such as Europe. The stock has added just 1.9% year to date. MCD YTD mountain McDonald’s stock Beverage company Coca-Cola was another one of the several consumer names on this week’s overbought list. Coca-Cola has an RSI of 79.66 on the list. Three-fifths of analysts covering the stock rate it a buy, and estimate 12.4% additional upside potential. The company managed to beat top- and bottom-line estimates in the third quarter and also raised its full-year guidance, coming on top of its rival PepsiCo. Although shares have managed to add more than 3% week to date, they remain down by more than 10% for 2023. Other overbought companies on the list include Monster Beverage and Keurig Dr Pepper , as well as restaurant groups Chipotle Mexican Grill and Darden Restaurants . To be sure, certain names could be primed for a bounce. Here are the 10 most oversold names in the broad market index: Several health care companies were among this week’s most oversold stocks. Catalent shares have tumbled more than 10% during the week, despite rallying 7.5% on Friday. The biotech company has an RSI of just 10.52, and less than one-third of analysts covering the company have a buy rating on shares. Nonetheless, the consensus price target suggests shares could gain 47.1%. Moderna also had a strong week, rising nearly 8%, but still remains one of the most oversold stocks on the broad market index. The vaccine maker has an RSI of 14.28. Shares fell 6% Thursday following the company’s earnings announcement . company posted a loss for the third quarter amid falling demand for its Covid shots, its only marketable product. Shares have tanked nearly 57% year to date. Solar energy companies Enphase Energy and SolarEdge Technologies also made the list, with RSI scores of 15.8 and 18.47, respectively. The solar sector has struggled in 2023 due to a high rate environment hurting demand. SolarEdge offered weak fourth-quarter guidance on Wednesday. Its third quarter results also came in below expectations, which CEO Zvi Lando attributed to a “slow market environment,” particularly in Europe. SEDG 1D mountain SolarEdge shares Revvity, Henry Schein, Align Technologies and Fortive are some of the other oversold names from this week.
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