Overbought Financials: Upstart, Toast & Flywire Signal Potential Caution
The financial sector is buzzing with positive news, but investors should tread carefully. As of November 8, 2024, three prominent players – Upstart Holdings (UPST), Toast (TOST), and Flywire (FLYW) – are showing signs of being overbought, a potential warning for those prioritizing momentum in their trading decisions. This overbought condition arises from the Relative Strength Index (RSI), a momentum indicator that gauges the strength of price increases compared to price declines. When the RSI surpasses 70, it typically suggests an asset may be overvalued in the short term.
Upstart Holdings (UPST):
Upstart, a fintech leader in artificial intelligence, reported better-than-expected quarterly earnings on November 7. The company saw a 43% increase in lending volume and a return to positive adjusted EBITDA. However, despite these positive signs, Upstart’s stock has surged by roughly 29% over the past month, pushing its RSI to a lofty 79.08. This could indicate a potential short-term correction.Toast Inc (TOST):
Toast, a restaurant technology company, also delivered impressive third-quarter results on November 7. The company added approximately 7,000 new locations, saw a 35% growth in recurring gross profit streams, and achieved an Adjusted EBITDA of $113 million. This strong performance boosted Toast’s stock by around 13% in the last month. However, its RSI currently sits at 85.15, signaling a high level of overbought conditions.Flywire Corp (FLYW):
Flywire, a global payments platform, reported better-than-expected third-quarter earnings and issued a strong revenue guidance for the fiscal year 2024. The company’s stock has gained about 11% in the past month, pushing its RSI to 77.08. While Flywire’s financial performance is commendable, the high RSI suggests potential for a short-term pullback.For investors who prioritize momentum-driven trading, the overbought signals from these financial stocks should be a cause for caution. While strong financial results are positive, the high RSI values could indicate that the recent rallies are unsustainable. It’s important to consider all factors before making any trading decisions.
