Four Stocks Have Just Entered Overbought Territory and Could Drop if Volatility Persists

Some of the stocks that rallied this week could be vulnerable to a pullback if market volatility continues.

‍

Markets have been turbulent recently, with sharp swings as investors digest the latest developments around President Donald Trump’s tariff plans. Investors are waiting to see if the U.S. can strike new trade deals with its partners, with Trump saying agreements could be finalized "over the next three to four weeks."

‍

Despite starting the week with sharp losses, the market managed to bounce back impressively. All three major indexes — the S&P 500, Nasdaq Composite, and Dow Jones Industrial Average — posted a four-day winning streak by Friday. The S&P 500 ended the week up over 4%, the Nasdaq soared nearly 7%, and the Dow rose more than 2%, marking a strong recovery from earlier weakness.

‍

Now, investor attention turns to a wave of Big Tech earnings reports expected next week. Positive results could help push the market even higher. Alphabet already set an encouraging tone, reporting stronger-than-expected earnings and revenue on Thursday, which sent its shares higher during Friday’s session.

‍

Using its stock screener, CNBC Pro identified the most overbought and oversold stocks of the week based on their 14-day Relative Strength Index (RSI). Typically, an RSI over 70 suggests a stock may be overbought and could experience a decline. Meanwhile, an RSI below 30 indicates a stock might be oversold and could rebound if broader markets strengthen.

‍

Among the overbought names was internet infrastructure provider VeriSign, which posted an RSI of 70.45. Analysts have placed an average price target of about $253 on the stock, suggesting a potential downside of over 7% from Friday’s closing level.

‍

VeriSign shares jumped 8% during Friday’s session, reaching a new all-time intraday high. The rally followed a strong first-quarter revenue report and the announcement of a new quarterly cash dividend of 77 cents per share, set to be paid on May 28 to shareholders on record as of May 19.

‍

The stock gained 10.6% over the past week alone and has surged almost 32% since the start of the year. Over the last six months, it’s risen more than 50%, highlighting significant momentum.

‍

Streaming powerhouse Netflix also emerged as one of the week’s most overbought stocks, posting an RSI of 72.18. Netflix shares hit a new record intraday high on Friday, rising more than 13% for the week. The stock has now climbed over 23% year-to-date and approximately 46% over the past six months.

‍

Netflix’s rally followed a strong quarterly earnings report, which showed a 13% year-over-year revenue increase. The company credited this growth to robust subscription numbers and rising advertising revenue.

‍

Thanks to its steady performance, Netflix was recently added to CNBC Pro’s All-Weather Stock List. Analysts, including those at Deutsche Bank, have praised Netflix for its resilience amid macroeconomic uncertainties, calling it the "most immune" media stock to Trump’s trade-related economic turbulence.

‍

Currently, Netflix has an average analyst price target of around $1,116 — indicating just about 1% upside potential based on Friday’s close.

‍

On the other side of the spectrum, two healthcare giants, Bristol Myers Squibb and UnitedHealth Group, were the only two stocks categorized as oversold this week. Bristol Myers posted an RSI reading of 24.41, while UnitedHealth’s was at 28.87.

‍

Both stocks badly underperformed the broader market this week. Bristol Myers fell nearly 3%, and UnitedHealth dropped almost 8% over the period.

‍

UnitedHealth’s struggles came after it issued an annual guidance cut, citing expectations for higher medical costs. Meanwhile, Bristol Myers raised its earnings and revenue outlook for the year, having also topped Wall Street’s first-quarter earnings expectations.

‍

Still, it’s been a brutal April for both companies. Bristol Myers shares have slumped 21.5% this month, while UnitedHealth shares have declined 20.1%. Year-to-date, Bristol Myers is down over 15%, and UnitedHealth has fallen more than 17%.

‍

Looking ahead, analysts see potential upside for both stocks. Bristol Myers’ consensus price target of $56 implies more than 17% upside from current levels. UnitedHealth’s consensus target of nearly $572 suggests an even bigger potential gain of more than 36%.

‍

As volatility remains high, investors will be watching closely to see if these overbought stocks pull back — and whether oversold names can stage a rebound.

‍

‍