As of August 23, 2024, investors focusing on momentum may want to pay close attention to two consumer staples stocks – Philip Morris International and Walmart. Both companies are exhibiting overbought signals, as indicated by their Relative Strength Index (RSI) values.
The RSI is a widely used technical indicator that measures the magnitude of recent price changes to evaluate overbought or oversold conditions in the market. An RSI reading above 70 typically signifies an overbought condition, suggesting potential price weakness in the near term.
Philip Morris International (PM)
Philip Morris International, a multinational tobacco company, saw its stock price surge following a strong second-quarter earnings report. The company exceeded analyst expectations and raised its adjusted earnings per share outlook. This positive performance led to a 10% increase in its stock price over the past month, reaching a 52-week high of $120.21. However, with an RSI value of 76.14, the stock is currently considered overbought. On Thursday, PM shares closed at $120.10, up 0.1%.
Walmart (WMT)
Walmart, the largest retailer in the world, also saw its stock rise recently. On August 22, Evercore ISI Group analyst Greg Melich maintained an Outperform rating on Walmart and raised the price target from $78 to $80. This positive outlook contributed to a 7% increase in the stock price over the past month, reaching a 52-week high of $76.22. However, with an RSI value of 75.34, Walmart’s stock is currently considered overbought. On Thursday, WMT shares closed at $75.58, up 0.5%.
These overbought signals, while not guaranteeing a price drop, do suggest a potential pause in the upward momentum of both Philip Morris International and Walmart. Investors relying on momentum strategies may want to consider these signals when making their investment decisions.
