Stocks ended the week on a positive note, but some of them could face a reversal soon. This week was marked by high volatility, with gains on Monday and Tuesday, followed by a decline on Wednesday due to fears of rising interest rates in 2026. Markets rebounded on Thursday, with gains for the three main indices.
Overbought Stocks
CNBC Pro's screening tools have identified the most overbought stocks of the week based on their 14-day Relative Strength Index (RSI). An RSI above 70 is considered overbought, which could mean that the stock may experience a correction soon. The Relative Strength Index (RSI) is a technical tool used to measure the strength of a stock or index by comparing the average gains and losses over a given period.
The RSI is calculated based on the gains and losses of the past 14 days. An RSI above 70 indicates that the stock is overbought, meaning that investors have heavily bought the stock and its price has significantly increased. In this case, it is possible that investors may start taking profits, which could lead to a price correction for the stock.
Conversely, an RSI below 30 indicates that the stock is oversold, meaning that investors have heavily sold the stock and its price has significantly decreased. In this case, it is possible that investors may start buying the stock, which could lead to a price increase for the stock.
Both companies benefited from President Donald Trump's announcement that Intel had concluded an agreement with Apple to design and manufacture chips in the United States. This agreement was seen as a positive signal for the semiconductor industry, as it shows that major companies are ready to invest in chip production in the U.S.
Applied Materials also benefited from the reiteration of Citi's buy note, which raised its price target to $710. This increase in the price target implies a potential 15% rise compared to Thursday's closing price.
Citigroup and Morgan Stanley
Citigroup and Morgan Stanley were also considered overbought stocks this week. The two companies recorded gains of 2% and 4%, respectively, with RSIs of 75 and 74.
On June 18, Citigroup reached a new 52-week high. Wells Fargo reiterates its overweight rating on Citigroup shares and raised its price target to $165 from $162 previously. This increase in the price target implies a potential 15% rise compared to Thursday's closing price.
Citigroup also announced that it would focus on sustainability, responsibility, and execution, as discussed during the meeting with the CEO after the investor day. This new strategy was considered positive by investors because it shows that the company is ready to focus on the fundamentals of its business.
Accenture
Accenture, on the other hand, was considered a declining stock this week. The company recorded a loss of nearly 25% with an RSI of 23.
The company announced that it would acquire runZero, a company specializing in asset intelligence, as well as NetRise, a supply chain device and software security company. Accenture also announced that it would take a majority stake in Dragos, a cybersecurity company.
These acquisitions were considered positive signals by investors because they show that the company is ready to invest in new technologies and expand into new areas. However, the decline in Accenture's stock value this week indicates that investors are cautious and want to see how these acquisitions will be integrated into the company's activities.
The economic mechanism at play in this case is related to how investors react to announcements and events affecting companies. Investors are constantly looking for information that can help them make informed decisions about the stocks they buy and sell. When a company announces an acquisition or a new strategy, investors analyze this information to determine if it is positive or negative for the company.
Regarding Applied Materials and Western Digital, investors reacted positively to the announcement of Intel's agreement with Apple because they believe it will be beneficial for the semiconductor industry. Regarding Citigroup and Morgan Stanley, investors reacted positively to the reiteration of the buy rating and the increase in the price target because they believe it shows that the companies are strong and have growth potential.
On the other hand, investors reacted negatively to the decline in Accenture's stock value because they believe the acquisitions announced by the company may not be beneficial for the business. This shows that investors are cautious and want to see how events and announcements will affect companies before making investment decisions.
It is important to note that the economic mechanism at play in this case is complex and involves many factors, including investor psychology, market trends, and macroeconomic events. Investors should take these factors into account when making investment decisions because they can have a significant impact on the performance of their portfolios.
