The 10 most overbought and oversold stocks on the ASX 200 – Week 31

Shares in AGL Energy (ASX: AGL) are up 82% from its low point in mid-March, which makes it the most overbought stock on the ASX 200.

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, AGL is the most overbought stock with an RSI of 85.

Most Overbought Stocks

'Target price' is an aggregate of all broker target prices under Refinitiv's database. Data as at Friday 28, July 2023 close. (Table: Market Index | Source: Refinitiv)

Last week, Credit Corp was the most overbought ASX 200 stock with an RSI of 85. The company experienced an almost 7% pullback between 24-26 July, which was followed by a V-shaped rally back to recent highs. Despite the recent strength, the pullback helped reset the RSI to 71.

Credit Corp 3-month price chart (Source: Market Index)

AGL Energyshares have been on an extraordinary run thanks to an improved outlook for electricity markets. Last month, the company guided to FY24 net profit between $580-780 million, more than double what it’s expecting in FY23 ($255-285 million). The stock has taken very few breathers in its run to fresh two-and-a-half year highs. This begs the question – When will we see a pullback?

AGL 12-month price chart (Source: Market Index)

Megaport launched into overbought territory after two massive gap ups:

• 11 July (+34.0%) after EBITDA guidance update for FY23 and FY24

• 27  July (+14.4%) after quarterly cash flow report

The stock is down around 1.8% on Monday afternoon.

Megaport 3-month price chart (Source: Market Index)

And here’s a list of the most oversold ASX 200 stocks.

Most Oversold Stocks

'Target price' is an aggregate of all broker target prices under Refinitiv's database. Data as at Friday 28, July 2023 close. (Table: Market Index | Source: Refinitiv)

There are six battery metal stocks on the oversold list – Which are down an average 16.2% in the past month.

Core Lithium shares nosedived 17% last Monday after its FY24-25 production and cost guidance came in well below company guidance and consensus. The lithium and battery metals sector is entering a phase where the tide does not lift all boats – And in the case of these oversold stocks, there’s a reason why they’re lagging behind and struggling to bounce from recent lows.

Core Lithium 12-month price chart (Source: Market Index)