The S & P 500 ended the week with a modest gain, but some names could soon be due for a pullback, according to one market metric. Even though it was an overall positive week for the market, with the broad market index posting a weekly gain of 0.6%, trepidation rose as the artificial intelligence-bolstered rally finally showed some signs of weakness.
Shares of AI darling Nvidia fell 4% on the week, ringing alarm bells that the tech-dominated market might finally be overextended. To that end, CNBC Pro used its stock screener tool to find the most overbought and oversold names on Wall Street, employing the 14-day relative strength index, or RSI, as a metric. Stocks that have a 14-day RSI above 70 are said to be overbought, indicating that shares might soon be due for a pullback.
On the other hand, a reading below 30 corresponds to an oversold stock, or one with a potential rebound on the horizon. Microsoft was among the most overbought stocks this week, with an RSI of 74. The tech giant is a beneficiary of artificial intelligence with Jefferies dubbing it earlier this month a "Top AI Pick Going for AI Gold, Not Silver.
" "MSFT is proud of how it has been able to push the throttle on AI investments setting themselves up to win the long term opportunity while still delivering operating leverage the past few years," wrote Jefferies analyst Brent Thill in a June 13 report. Even as shares are up nearly 20% this year, consensus price targets from LSEG call for nearly 9% of upside. Corn.
