Nike is Among the Most Overbought Stocks in the S&P 500

After experiencing a decline this year, it's possible that Nike's shares may continue to drop, as indicated by a key metric.

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Stock markets have faced significant losses this week. Up to this point, the S&P 500 has seen a 1.8% decline for the week, while the tech-oriented Nasdaq Composite is trading around 2.5% lower. The Dow Jones Industrial Average has also fallen by more than 1%.

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Following this week's developments to identify the most overbought and oversold companies in the S&P 500, using their 14-day relative strength index (RSI) as a basis.

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A stock with a 14-day RSI exceeding 70 is regarded as overbought, suggesting a potential pullback. Conversely, an RSI below 30 usually indicates an oversold stock, potentially presenting a buying opportunity.

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Sportswear retailer Nike currently has a 14-day RSI of 81.89, with just under half of the analysts covering the stock rating it as a buy. While Nike's shares have dropped by nearly 12% this year, analysts anticipate a more than 16% increase in the next 12 months based on the average price target, which is the highest expected upside on the list.

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Despite recently missing revenue expectations for the first time in two years, Nike's strong performance in terms of gross margins and earnings has kept investors optimistic. Additionally, the brand continues to maintain its top position among teenagers, according to a Piper Sandler survey.

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Lockheed Martin is another company on the list of overbought stocks, with a 14-day RSI of 77.69 and a consensus price target suggesting a 6.8% upside. The firm posted better-than-expected third-quarter results, although its shares have decreased by 8% in 2023.

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Progressive, the insurance giant, is also considered overbought. Its shares have gained 20% so far this year, and Piper Sandler recently upgraded its rating to overweight due to stronger-than-expected results in September.

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Other companies on the list of overbought stocks include Cigna, Cardinal Health, Allstate, and Humana.

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In contrast, here are the most oversold stocks in the S&P 500, which may be due for a rebound:

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Invesco, an investment management firm, tops the list with the lowest 14-day RSI at 21.52. Its shares have fallen by nearly 29% in 2023, with a consensus price target indicating a 23% potential upside. However, only about 12% of analysts rate it as a buy. Invesco reached a 52-week low during Friday's trading session.

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Toymaker Hasbro is also among the oversold stocks but is highly favored on Wall Street. Over 80% of analysts covering the company rate it as a buy, and the consensus average target price suggests a potential upside of 41.7%.

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Another company on the oversold list is Moderna, a pharmaceutical firm, with a 14-day RSI reading of 15.5. Moderna's shares have fallen by 22% in October, partly due to concerns over declining demand for Covid vaccines. Competitor Pfizer recently reduced its full-year revenue and earnings guidance due to waning demand for Covid vaccines and treatments.

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Additional oversold stocks in the broader index include Hormel, Lowe's, and FedEx.

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