The 10 most overbought and oversold ASX 200 stocks – Week 3

Stocks almost always bottom before the economy – And that's taking place right before our very eyes, with retail names like JB Hi-Fi (ASX: JBH), Super Retail Group (ASX: SUL) and Premier Investments (ASX: PMV) up more than 20% in the past two months.

The 14-day Relative Strength Index is a momentum indicator that measures the magnitude and speed of recent price changes to assess whether or not a stock is overbought or oversold.

An RSI of 70 or above is considered to be overbought, which means the stock is rising too quickly and likely to experience a pullback. Meanwhile, an RSI of 30 or below is considered to be oversold, which means the stock is falling too quickly and is likely to experience a rebound.

Based on this indicator, JB Hi-Fi is the most overbought stock on the ASX 200 with an RSI of 82.

The Most Overbought Stocks

'Target price' is an aggregate of broker target prices from Refinitiv. Data of Friday, 12 January 2024 close.

JB Hi-Fi shares have quietly rallied 25% since the beginning of December.

JB Hi-Fi price chart with RSI (Source: TradingView)

Here's a little recap of some the latest consumer-related data:

• ABS: Australian retail sales rose 2.0% month-on-month in November 2023 following a 0.4% drop in October. "Black Friday sales were again a big hit this year, with retailers starting promotional periods earlier and running them for longer, compared to previous years," said Robert Ewing, ABS Head of Statistics.

• ABS: Household spending rose 3.1% year-on-year in November 2023. Some of the key areas of interest include:

  • Non-discretionary spending rose 5.8% year-on-year, driven by a rise in transport and health-related segments

  • Households spend 0.3% more on discretionary and services segments in November 2023 than a year ago

  • Spending on furnishings and household equipment was 1.7% higher than a year ago, while clothing and footwear fell 0.1%

• Westpac: Westpac's Leading Index growth rate lifts to 0.3%, marking the first positive reading since mid-2022. The surprise uptick appears to be due to temporary factors but the underlying momentum looks to have improved. "Underlying momentum is shifting as policy tightening slows but more consistent with stabilisation than the beginning of a cycle upturn," the report notes

The Most Oversold Stocks

The strength of the broader market has kept most stocks on this list from becoming heavily oversold. Some of the more interesting stock moves include:

• Shares in Worley sold off last week amid speculation that the company was engaged in "serious and widespread illegal conduct" in Ecuador

• Chalice Mining remains oversold after palladium prices went on an 11-day skid between 22 December and 9 January

• Most gold names have slumped 10-15% in the past two weeks

'Target price' is an aggregate of broker target prices from Refinitiv. Data of Friday, 12 January 2024 close.