The 10 most overbought and oversold ASX 200 stocks – Week 36

Defensive healthcare stocks and companies that delivered better-than-expected results during reporting season have managed to buck the trend, not only withstanding the recent selloff but also climbing into overbought territory. In sharp contrast, companies that missed earnings expectations and resource stocks have continued their downward spiral.

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.

Fisher & Paykel is currently the most overbought stock on the ASX 200 with an RSI of 78 while Tabcorp sits at the opposite end with an RSI of just 15.

Most Overbought ASX 200 Stocks

Fisher & Paykel delivered a first-half 2024 result that exceeded market expectations and raised its full-year net profit forecast, driven by strong trading conditions across all products and regions. The result highlighted increased hospital admissions, positive changes in clinical practices and successful product launches, all of which contributed to a better-than-expected financial performance. The stock surged 11.9% on the day of the announcement (23-Aug) and has since climbed an additional 6.6%, pushing into overbought territory.

This narrative isn't unique to Fisher & Paykel. Other companies like Charter Hall, Wisetech, and Nanosonics have followed a similar pattern. These companies all delivered results or guidance that exceeded market expectations, experienced significant gains on the day of their results and have continued to trend upward into overbought territory.

Most Oversold ASX 200 Stocks

Tabcorp is trading at levels not seen since the March 2020 selloff. The FY24 result was disappointing on all fronts, with weaker-than-expected wagering revenues, a ballooning cost base and regulatory risks. Some of the key highlights from the result include:

• Group EBITDA down 19% year-on-year to $318 million and 3% below consensus

• Statutory net loss of $1.36 billion, more than double market expectations

• Operating costs came in above the high-end of FY24 guidance, up 4.5% to $614 million and management abandoned FY25 guidance

"Tabcorp is in a tough spot with wagering volumes seeing ongoing regulatory impacts, against a ballooning cost base. We cut to a Neutral rating, waiting for changes (hopefully) under the new CEO, with a view that the cost base needs to be right-sized and new wagering management may be required," Macquarie analysts said in a note last month. Tabcorp finished the results session (28 Aug) down 15% and has since tumbled a further 20%.

Stocks including MinRes, Johns Lyng and Perpetual have experienced a similar narrative – a sizeable one-day selloff on the back of a weaker-than-expected result followed by persistent selling.