The S&P 500 marked its second consecutive weekly decline, compounded by a 1.7% drop in the Dow Jones, as rising bond yields and a Federal Reserve rate hike weighed on investor sentiment. Despite the broader market’s struggles, a technical analysis indicates several individual stocks, including Boeing, Bank of America, and Wynn Resorts, are now in “oversold” territory and could be poised for a significant rebound. Conversely, some energy giants like Marathon Petroleum are showing “overbought” signals after a strong rally.
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The S&P 500 recently concluded another week in negative territory, marking its second consecutive weekly decline, while the Dow Jones Industrial Average experienced a steeper 1.7% drop over the same period. This market turbulence unfolded amidst a tumultuous week, primarily driven by a surge in global bond yields, with the yield on the benchmark 10-year Treasury note reaching its highest point in 19 years. Further dampening investor sentiment, the U.S. Federal Reserve enacted another 25 basis point hike to its benchmark interest rate on Wednesday, tightening monetary conditions even as some investors attempted to look past the move.
These recent declines have pushed a number of individual stocks into "oversold" territory, a technical indicator suggesting that their downward movement may have been excessive and a rebound could be imminent. A stock is generally considered oversold when its Relative Strength Index (RSI) falls below 30. Here are some of the prominent names exhibiting oversold conditions:
Boeing: The aerospace giant registered an RSI of 25. Its shares tumbled more than 5% this week after CEO Kelly Ortberg cautioned that stabilizing production of the crucial 737 Max aircraft was progressing slower than anticipated. Year-to-date, Boeing's stock has now shed approximately 9% of its value.
Bank of America: This financial institution also entered oversold territory, with its RSI hitting 28. Its stock slid 8% for the week following Chief Executive Brian Moynihan's forecast of a potential decline exceeding 10% in third-quarter investment banking fees.
Wynn Resorts: Standing out as the most oversold stock this week, Wynn Resorts recorded an RSI of just 17. Its shares plummeted over 5% during the week, hitting a new 52-week low just above $81. The luxury casino operator's stock has seen a significant 31% drop since the start of the year.
Other companies identified in oversold positions include Las Vegas Sands, Carrier Global, and TransDigm.
Conversely, while many stocks struggled, a few energy sector players found themselves in "overbought" territory, indicating they might be due for a near-term correction. A stock is classified as overbought when its RSI surpasses 70. Leading this list is:
Marathon Petroleum: With an RSI of 87, Marathon Petroleum topped the overbought list this week. Its shares surged more than 7%, reaching a record high of $428. This rally was fueled by increasing oil prices early in the week after Saudi Arabia announced the closure of its East-West pipeline due to a drone attack threat. Year-to-date, the stock has soared an impressive 161%, largely propelled by the broader impact of the Iran war on global energy markets.
Additional energy firms flagged as overbought include Valero Energy and Phillips 66.
