The energy sector is buzzing with activity, but two stocks, RPC Inc (RES) and Comstock Resources (CRK), are raising eyebrows with their recent price action. The Relative Strength Index (RSI), a popular momentum indicator, is flashing warning signs for investors who prioritize momentum in their trading decisions.
The RSI compares a stock’s strength during upward price movements to its strength during downward movements. A reading above 70 generally indicates that an asset is overbought. This suggests that the stock might be due for a correction in the near term.
RPC Inc (RES) is scheduled to release its third-quarter financial results on Thursday, October 24th. The stock has surged approximately 12% over the past five days, reaching a 52-week high of $9.26. The current RSI value for RES sits at a lofty 70.47. On Monday, RES shares gained another 2% to close at $7.14.
Comstock Resources (CRK) has also been on a roll. BMO Capital analyst Phillip Jungwirth maintained a ‘Market Perform’ rating on the stock while raising the price target from $10 to $11 on October 4th. This news, combined with the stock’s 30% gain over the past month, has pushed CRK’s RSI value to 71.45. The stock reached a 52-week high of $13.39 and closed Monday at $12.09, up 0.3%.
While both RES and CRK have been performing exceptionally well, their high RSI values suggest potential for a near-term pullback. Investors focusing on momentum strategies might want to exercise caution with these stocks and consider their potential overbought status before making any investment decisions.
