Investors relying on momentum indicators might want to take a closer look at three tech stocks: Motorola Solutions (MSI), Fortinet (FTNT), and GoDaddy (GDDY). These stocks are currently exhibiting signs of being overbought, according to their Relative Strength Index (RSI) values.
The RSI is a widely used momentum indicator that measures the magnitude of recent price changes to evaluate overbought or oversold conditions. When the RSI rises above 70, it generally signifies that an asset is overbought and might be due for a pullback.
Motorola Solutions (MSI)
: The company reported strong second-quarter earnings on August 1, with CEO Greg Brown highlighting “record Q2 sales and operating earnings.” As a result, MSI shares gained approximately 7% over the past month and reached a 52-week high of $424.55. However, its current RSI value of 71.75 suggests potential overbought conditions.Fortinet (FTNT)
: Fortinet’s strong performance continued with better-than-expected second-quarter results and an optimistic FY24 outlook. Founder and CEO Ken Xie attributed the success to “balancing growth and profitability.” The stock has rallied around 23% in the past month, hitting a 52-week high of $73.91. However, the RSI value of 77.94 further strengthens the overbought signal.GoDaddy (GDDY)
: GoDaddy also reported better-than-expected second-quarter sales results, with CEO Aman Bhutani highlighting a “great quarter.” The stock gained roughly 10% over the past month, reaching a 52-week high of $162.96. Its RSI value of 73.50 aligns with the overbought signals observed in the other two companies.While these companies have delivered strong performance recently, investors should exercise caution. The overbought signals from their RSI values suggest that a short-term correction could be on the horizon. It’s essential to conduct thorough research and consider the overall market context before making investment decisions.