These are the most overbought and oversold ASX 200 stocks – Week 2
Energy stocks showed particular strength last week, with names such as Monadelphous and Beach Energy pushing into overbought territory.
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The S&P/ASX 200 sold off as much as 5% in December, a move underpinned by several headwinds including growing recession fears, the Federal Reserve's forecast for fewer rate cuts in 2025 and the traditional year-end market slowdown. This resulted in fewer stocks pushing into overbought territory, while several underperforming stocks continued to sink into oversold territory.
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. In this weekly series, we observe some of the market's most overbought and oversold stocks.
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.
Energy stocks showed particular strength last week, with names such as Monadelphous Group, AGL Energy, and Beach Energy all pushing into overbought territory. Meanwhile, 2024's underperformers continue to face selling pressure. Notable examples include Seek, weighed down by weak earnings, and Audinate, which surprised markets with an earnings downgrade.
Most Overbought ASX 200 Stocks
Ticker | Company | RSI | 1-Month % | Close Price |
|---|---|---|---|---|
Monadelphous Group | 73 | 8.5% | $14.13 | |
Computershare | 70 | 8.1% | $34.61 | |
AGL Energy | 69 | 2.2% | $11.42 | |
Beach Energy | 69 | 16.2% | $1.44 | |
Bega Cheese | 67 | 7.8% | $5.70 | |
Santos | 67 | 3.8% | $6.88 | |
Inghams Group | 66 | 3.9% | $3.23 | |
Ampol | 65 | 2.2% | $29.21 | |
Viva Energy Group | 65 | 5.4% | $2.74 | |
Woodside Energy | 65 | 1.6% | $25.20 | |
Qube Holdings | 64 | 0.0304 | 4.07 |
Key takeaways:
Monadelphous is showing notable strength, up another 2.2% on Monday. The stock has rallied almost 7% in the past month while the broader market slipped around -2.3%. The company has not announced any market sensitive news since its AGM on 19 November 2024, where management said they expect revenue in the second half of FY25 to be slightly up on the prior period as well as continued margin improvement for the financial year. The strength of Monadelphous has resonated with other engineering companies such as GR Engineering and Worley, both of which have gained 7.1% and 5.3% respectively in the past month.
Oil prices are currently on a five-day win streak, up 4.6% since Friday, 27 December. According to Bloomberg, this strength reflects robust demand from Asian refiners, after barrels from Iran and Russia became sparse and more expensive. This has helped several energy stocks like Beach Energy, Santos and Woodside flip from oversold to overbought. On 19 December 2024, Woodside was trading at its lowest level since May 2022 and down 22% for the year. It's now on a nine-day win streak, up 10.3%.
Most Oversold ASX 200 Stocks
Ticker | Company | RSI | 1-Month % | Close Price |
|---|---|---|---|---|
Data#3 | 27 | -18.2% | $6.34 | |
Orica | 29 | -9.1% | $16.60 | |
Seek | 29 | -15.0% | $22.40 | |
James Hardie Industries | 30 | -11.6% | $49.77 | |
Audinate Group | 32 | -16.4% | $7.29 | |
Clarity Pharmaceuticals | 32 | -31.8% | $4.10 | |
Collins Foods | 33 | -14.3% | $7.39 | |
Endeavour Group | 33 | -4.1% | $4.20 | |
Bluescope Steel | 34 | -14.3% | $19.00 | |
Cleanaway Waste Management | 34 | -8.9% | $2.65 |
Key takeaways:
Data#3's shares plunged 9.8% on 17 December 2024 following announced changes to its Microsoft Partner Incentive Program. The revisions, set to take effect from 1 January 2025, will reduce incentives earned on Microsoft Enterprise agreements. Management estimated these changes would have trimmed approximately 3% from FY24 gross profit if applied retrospectively. Data#3 has implemented a number of initiatives to offset this weakness and reaffirmed its first-half FY25 pre-tax earnings of $31-33 million. Despite the company's efforts to offset potential concerns, the stock has declined a further 4% since the announcement, highlighting how negative updates can often have a lingering affect on share price performance.
Endeavour Group finished the 2024 calendar year down 16% to record lows. A distribution centre strike from Woolworths around mid-December impacted stock availability across stores in Victoria, Tasmania and Southern NSW. This has only added further to headwinds, as flagged by UBS analysts earlier this month, including "i) operating deleverage as cost inflation exceeds top-line growth in a competitive market, ii) increasing One Endeavour costs, iii) the prospect of a longer-term rent reset, and iv) potential future gaming regulatory changes."
