The financial sector is buzzing with activity, but some investors might be looking for a pause. As of September 23, 2024, three stocks in the sector are flashing a warning sign – overbought conditions. This signal is determined by the Relative Strength Index (RSI), a key momentum indicator that compares a stock’s strength on up days to its strength on down days. A stock with an RSI above 70 is typically considered overbought, suggesting potential short-term price corrections.
Let’s take a closer look at these three overbought players:
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ICICI Bank Ltd (IBN):
ICICI Bank’s stock has been on a roll, gaining around 10% over the past month. The company recently filed its annual report for the fiscal year 2024 and reached a 52-week high of $31.60. However, its current RSI value of 79.28 suggests potential short-term weakness. On Friday, September 20, shares closed at $31.38, up 2%.*
HDFC Bank Ltd (HDB):
While HDFC Bank’s stock has been downgraded to Neutral by JP Morgan analyst Saurabh Kumar, it has still managed to gain around 8% over the past month. The company’s 52-week high is $67.44. However, an RSI value of 79.06 indicates potential for a pullback. Shares closed at $65.73 on Friday, up 1.4%.*
Jefferies Financial Group Inc (JEF):
Jefferies Financial received a Buy rating and a $67 price target from UBS, which initiated coverage on the stock on September 17. The stock gained around 6% over the past five days and reached a 52-week high of $62.67. However, with an RSI value of 70.42, the stock might be due for a correction. On Friday, shares closed at $62.07, down 0.4%.It’s important to note that while these stocks may be overbought in the short term, their long-term prospects could still be positive. Investors who value momentum in their trading strategies should consider these RSI signals and adjust their positions accordingly. Remember, it’s always a good idea to consult with a financial advisor before making any investment decisions.
