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Evening Wrap: ASX 200 thumped as nagging inflation dashes 2024 rate cut hopes, gold & copper only places to hide
Fri 26 Apr 24, 5:43pm (AEST)
Data Insights
The 10 most overbought and oversold stocks on the ASX 200 – Week 32
By
Kerry Sun
Mon 07 Aug 23, 1:15pm (AEST)
Source: iStock
Stocks in article
Key Points
- Beach Energy, Computershare and Orora are among the most overbought stocks on the ASX 200
- Shares in AGL Energy finally cratered after more than 3 months in overbought territory
- Several lithium and battery metal names are struggling to catch a bid and bounce from oversold levels
The resurgence in energy prices and an upbeat June quarter report from Beach Energy (ASX: BPT) has propelled its shares almost 30% since late June – Making 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, Beach Energy is the most overbought stock with an RSI of 73.
The Most Overbought Stocks
Ticker | Name | RSI | 1-Month % | Close Price | Target price | Upside |
|---|---|---|---|---|---|---|
Beach Energy | 73 | 19.5% | $1.66 | $1.80 | 8.8% | |
Computershare | 72 | 7.5% | $25.20 | $28.12 | 11.6% | |
Orora | 72 | 9.4% | $3.60 | $3.60 | 0.0% | |
Insurance Australia Group | 70 | 5.4% | $6.10 | $5.65 | -7.4% | |
Virgin Money | 70 | 22.7% | $3.51 | ~ | ~ | |
Breville Group | 69 | 13.1% | $23.45 | $22.38 | -4.6% | |
Costa Group | 69 | 1.5% | $3.33 | $2.97 | -10.8% | |
Wisetech Global | 69 | 12.3% | $87.00 | $74.90 | -13.9% | |
TPG Telecom | 68 | 12.1% | $5.46 | $5.66 | 3.7% | |
Pro Medicus | 67 | 9.6% | $70.24 | $64.74 | -7.8% |
'Target price' is an aggregate of all broker target prices under Refinitiv's database. Data as at Friday 4, August 2023 close. (Table: Market Index | Source: Refinitiv)
The RSIs aren’t as overcooked this week following an almost 2% pullback for the ASX 200 between 2-3 August.
Thematically, we’re seeing a few themes at play:
Defensives: Computershare, Orora
Discretionary bounce: Breville (other names like Domino’s Pizza and Harvey Norman also trading at RSIs of +60)
Tech: WiseTech (other names like Megaport and Seek also trading at RSIs of +60)
Earnings updates: Virgin Money, Beach Energy
AGL Energy (ASX: AGL) was trading at an RSI of over 60 since 1 May. During this time, the stock ran as much as 50% thanks to the bullish outlook for electricity prices and near-term earnings outlook.
The run came to an end on 2 August, where the stock finished the session 4.7% lower. Macquarie noted that the 1-year forward curve – often viewed as a leading indicator of AGL’s performance – is down 10-12% in FY25.
“AGL’s price is +30% since investor day in June (ASX 200 +4%). It has captured the FY24 growth. FY24 is likely to be peak electricity pricing, thus the ability to sustain the FY24 earnings into FY25 is now challenge,” the analysts said in a note last week.
What are some key takeaways from AGL’s monstrous rally (and overbought stocks in general)?
Most of the overbought stocks have rallied for least 1-2 weeks (aka the trend is your friend)
Most of the overbought stocks experience brief and shallow pullbacks
A few overbought stocks have fallen sharply from trading updates (Downer, Credit Corp)
As for oversold stocks …
The Most Oversold Stocks
Ticker | Name | RSI | 1-Month % | Close Price | Target price |
|---|---|---|---|---|---|
Core Lithium | 22 | -33.0% | $0.64 | $0.70 | |
Lake Resources | 22 | -28.3% | $0.22 | $1.59 | |
Link Administration | 25 | -10.5% | $1.45 | $2.30 | |
Invocare | 27 | -5.6% | $11.78 | $10.61 | |
Regis Resources | 27 | -16.2% | $1.61 | $2.05 | |
Resmed Inc | 32 | -5.0% | $30.70 | ~ | |
Allkem | 33 | -11.6% | $14.36 | $17.43 | |
Iluka Resources | 33 | -11.7% | $10.11 | $11.19 | |
Syrah Resources | 33 | -23.5% | $0.69 | $1.18 | |
Northern Star | 34 | -11.9% | $11.20 | $12.78 |
'Target price' is an aggregate of all broker target prices under Refinitiv's database. Data as at Friday 4, August 2023 close. (Table: Market Index | Source: Refinitiv)
The oversold list remains almost unchanged compared to a week ago. The names that have made another appearance this week include: Core Lithium, Lake Resources, Link Administration, Iluka Resources, Syrah Resources and Northern Star.
This suggests that the stocks are struggling to catch a bid and bounce – Even if the indicator suggests a technical bounce is brewing.
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