Microsoft may be due for pullback as one of the most overbought stocks
Stocks that saw gains in recent days could be at risk of sliding, according to one popular technical indicator. Major U.S. indexes tumbled Friday on fears that the economy could be headed toward a slowdown, after July’s jobs data came out far weaker than expected and President Donald Trump rolled out modified tariff rates . This week, the S & P 500 lost about 2.4%, while the tech-heavy Nasdaq Composite tumbled 2.2%. The Dow Jones Industrial Average shed 2.9%. After this week’s rocky performance, CNBC Pro used its Stock Screener tool to identify the market’s most overbought and oversold stocks this past week based on their 14-day relative strength index, or RSI. A stock with an RSI reading above 70 can suggest it could be overbought and may see a dip in the near term. On the other hand, an RSI below 30 indicates a stock is oversold and could see gains ahead. Take a look at Wall Street’s most overbought names below: Microsoft shares jumped after the software giant posted strong earnings and revenue for its fiscal fourth quarter, briefly putting the company’s market cap above $4 trillion. Microsoft reported revenue from its Azure business and other cloud services for the first time, with sales exceeding $75 billion for fiscal year 2025, up 34% from the prior year. Shares of Microsoft gained 2% this week. The stock has an RSI of 78.4, making it one of the most overbought on the list. Analysts from Goldman Sachs and Bank of America lifted their price targets on Microsoft after its financial results. Defense and aerospace company Northrop Grumman made the overbought list with an RSI of 76.1. Shares rose 1.7% on Friday, defying much of the broader market’s moves and touching an all-time high. The stock advanced 2.9% this week. Northrop, up nearly 25% in 2025, is benefiting from increased global defense funding and geopolitical tensions . Half of the 24 analysts covering Northrop Grumman have either a strong buy or buy rating on the stock, while the remaining 12 rate it a hold, according to LSEG. Power generation products maker Generac and data storage company Western Digital are other overbought names this week, with respective RSIs of 79.1 and 74.2. Meanwhile, take a look at the most oversold companies: Health care giants Centene and Molina Healthcare could see upside after getting battered this week. Shares of Centene, which has an RSI of 23.1, lost 8.7% this week. The managed care company’s surprise second-quarter adjusted loss weighed on the stock. Molina Healthcare, with an RSI of 22.8, dropped about 6% this week. Other oversold names are Charter Communications , industrial supply company W.W. Grainger and research firm Gartner .
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