Potential Rebound for Oversold Stocks
Investors have largely avoided certain stocks this week, but these could be set for a recovery if the market rebounds. The stock market has faced significant declines, particularly after President Donald Trump announced new tariff policies on Wednesday. All three major indices finished the week in the negative, with the tech-focused Nasdaq Composite suffering the greatest loss at 10%. Investors are staying cautious, concerned that the sell-off could deepen.
Cautious Outlook from Investment Experts
Citi Wealth’s Chief Investment Officer Kate Moore expressed her concerns on CNBC’s “Squawk Box,” stating that “the uncertainty factor is just starting,” and she is reluctant to take on more risk at the moment. However, if there is a market relief rally, some stocks may experience a rebound, based on popular technical analysis methods.
Understanding Technical Analysis
This style of analysis is employed for quick trades rather than long-term investments. Using a stock screener tool, CNBC Pro identified the most oversold and overbought stocks on Wall Street, evaluating their 14-day relative strength index (RSI). An RSI below 30 indicates that a stock is oversold and could potentially bounce back. Meanwhile, an RSI above 70 suggests that a stock may be overbought and may decline soon.
Notable Oversold Stocks
GE Healthcare stands out on the oversold list with an RSI of just 10.4, and its average price target suggests a potential 59% increase. Recently, Goldman Sachs analyst David Roman upgraded the stock from neutral to buy, raising the price target from $85 to $100, indicating a possible 65% upside from its closing price last Friday.
Market Enthusiasm for Seagate Technology
Another oversold stock is Seagate Technology, which has a low RSI of 13. Analysts predict a possible 79% increase, with Morgan Stanley designating it as a top pick due to its potential benefits from rising data demand. Analyst Erik Woodring believes we are still in the midst of a market upswing, setting a price target of $138, suggesting an increase of approximately 107% from its closing price.
Concerns for Overbought Stocks
The recent market downturn has driven investments into consumer staples and income-generating stocks considered less affected by a trade war. However, many of these stocks may face underperformance if the market stabilizes. Monster Beverage, for instance, shows an RSI of 76 with a forecast for a 5% decline. Goldman Sachs has mentioned this stock as a strong choice due to promising growth prospects, yet the firm advises caution regarding consumer spending trends.
Future Insights on American Tower
American Tower also appears overbought with an RSI of 77, indicating only 1% upside based on its average price target. Recently, Morgan Stanley initiated coverage on the stock with an overweight rating and a price target of $250, which implies a potential increase of 14% within the next year, citing accelerating growth factors.
