While the recent robust performance of major U.S. stock indices signals a healthy market, a technical alert has emerged: a number of leading equities are now displaying overbought conditions, as indicated by their Relative Strength Index (RSI). This divergence between broader market strength and individual stock technicals suggests that although the overall rally may continue, specific components could be poised for short-term corrections.
- U.S. stock indices recorded significant gains, with the S&P 500 achieving 14 year-to-date record highs and the Dow Jones and Nasdaq Composite also rising.
- Analysts report a growing number of stocks exhibiting overbought conditions, characterized by an RSI reading above 70.
- Companies like Advanced Micro Devices (AMD), Northrop Grumman (NOC), Block (SQ), Newmont (NEM), and GE Vernova (GEV) are currently identified as overbought.
- Conversely, International Business Machines (IBM), Philip Morris International (PM), and Texas Instruments (TXN) have recently fallen into oversold territory (RSI below 30).
- Specific corporate developments, such as AMD’s MI308 chip shipment plans and Northrop Grumman’s B-21 bomber program, significantly influenced these stock movements.
Overbought Signals Emerge Among Market Leaders
Among the prominent companies exhibiting overbought signals, Advanced Micro Devices (NASDAQ: AMD) notably exemplifies this trend, with its shares climbing 6% and pushing its RSI close to 77. This surge was primarily driven by reports of the company’s intention to resume shipments of its MI308 chips to China, pending approval from the U.S. Department of Commerce. Similarly, defense contractor Northrop Grumman (NYSE: NOC) saw its shares climb an impressive 9.8%, propelling its RSI to 73. This ascent was fueled by better-than-expected second-quarter revenues and an upgraded annual forecast. CEO Kathy Warden anticipates that the B-21 bomber program could eventually contribute over 10% to total revenues, highlighting its strategic importance. Other firms noted in similar overextended positions include Block (NYSE: SQ), Newmont (NYSE: NEM), and GE Vernova (NYSE: GEV), the latter having surged 12% following a strong quarterly report that prompted positive price target revisions from major financial institutions such as Citi and Bank of America.
Contrasting Oversold Conditions
Conversely, some large-cap stocks have recently fallen into oversold territory, characterized by an RSI below 30, potentially indicating a short-term rebound opportunity. International Business Machines (NYSE: IBM), for instance, saw its shares decline over 9%, pushing its RSI to 26. This drop occurred after the company reported software revenues that fell below analyst expectations, despite an overall earnings beat. Philip Morris International (NYSE: PM) also experienced a notable drop of nearly 10% in the week, with its RSI falling to 29. This decline was attributed to disappointing financial results and weaker-than-expected shipments of its Zyn product. Texas Instruments (NASDAQ: TXN) was also identified by analysts as experiencing oversold conditions, suggesting potential for a technical bounce.

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