Despite the S&P 500’s second consecutive weekly loss, driven by rising bond yields and a Fed rate hike, several stocks have entered oversold territory and could be due for a rebound. Boeing, Bank of America, and Wynn Resorts are among those with a Relative Strength Index (RSI) below 30, signaling potential bounces. Meanwhile, energy stocks like Marathon Petroleum, Valero Energy, and Phillips 66 are considered overbought after significant gains, some influenced by geopolitical events affecting oil prices.
After the S&P 500 recorded its second consecutive weekly decline, falling 0.1%, and the Dow Jones Industrial Average dropped 1.7%, several individual stocks have been pushed into significantly oversold territory, suggesting they could be ripe for a bounce. This market turbulence unfolded amidst a week dominated by rising global bond yields, with the 10-year Treasury yield hitting a 19-year high, and a 25 basis point rate hike by the U.S. Federal Reserve.
A stock is considered oversold when its Relative Strength Index (RSI) falls below 30, indicating that its recent decline might have been excessive and a reversal could be imminent. Among the stocks hitting this key technical level, Boeing stands out with an RSI of 25. Its shares slid over 5% this week after CEO Kelly Ortberg warned that the stabilization of 737 Max production is taking longer than anticipated. Year-to-date, Boeing's stock is down approximately 9%.
Bank of America also entered oversold territory, registering an RSI of 28. The bank's shares fell 8% this week after CEO Brian Moynihan projected a more than 10% decline in third-quarter investment banking fees. Wynn Resorts emerged as the most oversold stock of the week, with a strikingly low RSI of 17. Its shares plummeted over 5% to a new 52-week low just above $81, having shed around 31% by 2026. Other companies identified as oversold include Las Vegas Sands, Carrier Global, and TransDigm.
Conversely, some energy sector stocks found themselves in overbought territory, characterized by an RSI above 70, signaling they might be due for a near-term pullback. Marathon Petroleum led this list with an RSI of 87. The company's shares surged more than 7% this week to a record high of $428. This rally was fueled by higher oil prices earlier in the week, following Saudi Arabia's closure of its East-West pipeline due to a drone attack. The stock has seen an impressive 161% jump year-to-date, attributed broadly to the impact of the Iran war on global energy prices. Valero Energy and Phillips 66 were also noted in the overbought category.
