These are the most overbought and oversold ASX 200 stocks – Week 3
Industrials and Energy stocks continue to demonstrate relative strength while consumer-related stocks suffer.
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The S&P/ASX 200 continues to face heavy selling pressure against a backdrop of soaring bond yields, rising inflation expectations and a pullback in rate cut expectations for 2025. This challenging environment results in fewer overbought stocks while deepening losses for already overstock names.
RSIs Explained
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.
Most Overbought ASX 200 Stocks
Ticker | Company | RSI | 1-Month % | Close Price |
|---|---|---|---|---|
Monadelphous Group | 78 | 7.5% | $14.57 | |
Arcadium Lithium | 77 | 12.7% | $9.13 | |
Insignia Financial | 76 | 36.0% | $4.12 | |
Sigma Healthcare | 73 | 4.2% | $3.00 | |
Aristocrat Leisure | 69 | 4.2% | $71.89 | |
Sims | 68 | 4.7% | $13.40 | |
Santos | 68 | 6.6% | $6.97 | |
De Grey Mining | 67 | 0.8% | $1.94 | |
Beach Energy | 66 | 15.2% | $1.44 | |
Genesis Minerals | 65 | 1.9% | $2.72 |
Data as at Friday, 10 January 2025
Key takeaways:
Monadelphous remains the market's most overbought stock for a second consecutive week, up 4.2% year-to-date and 7% in the past month. The industrial sector, particularly engineering, shows remarkable strength, likely bolstered by the strong US dollar. Citi analysts noted in December 2023 that defensive sectors and companies with significant US-dollar earnings typically outperform during periods of dollar strength, attributing this pattern to the correlation between defensive performance and economic uncertainty.
Arcadium Lithium shares surged 7.9% on Thursday, January 9, following US Committee on Foreign Investment approval for its proposed Rio Tinto acquisition. While the deal still awaits investment screening approvals in Australia, Canada, and Italy, along with other closing conditions, investors responded positively to this key milestone. The stock currently trades at a 3.1% discount to Rio Tinto's offer price of US$5.85 (A$9.5) per share.
Energy has flipped the switch to emerge as the best performing sector year-to-date, marking a dramatic turnaround as one of the worst performing sectors in 2024. Oil prices have surged more than 10% since late December after the US imposed sweeping new sanctions on Russia's oil industry. Citi analysts believe these measures could target nearly 30% of Russia crude oil exports, pushing stocks like Beach Energy and Santos into overbought territory.
Most Oversold ASX 200 Stocks
Ticker | Company | RSI | 1-Month % | Close Price |
|---|---|---|---|---|
The Star Entertainment | 21 | -42.1% | $0.11 | |
Elders | 26 | -6.8% | $6.95 | |
Seek | 26 | -15.5% | $21.77 | |
Lovisa | 28 | -14.8% | $26.02 | |
Collins Foods | 29 | -9.9% | $7.13 | |
Treasury Wine Estates | 31 | -5.7% | $10.84 | |
Clarity Pharmaceuticals | 32 | -31.4% | $3.87 | |
Data#3 | 32 | -17.8% | $6.37 | |
Endeavour Group | 32 | -4.7% | $4.09 | |
Ramsay Health Care | 32 | -14.5% | $33.75 |
Data as at Friday, 10 January 2025
Key takeaways:
The Star Entertainment Group faces mounting challenges after its recent cash and liquidity update revealed a sharp decline in cash reserves to $79 million as of December 31, 2024, down from $149 million in September. Despite drawing down Tranche 1 of its new debt facility, the company requires additional liquidity support. Management continues to pursue an extra $100 million in funding, though meeting the necessary conditions remains "challenging" given the group's current position.
Consumer-related stocks, including Collins Foods, Treasury Wine Estates, and Endeavour Group, continue to face downward pressure in 2025. November's retail sales data fell short of economist expectations, rising 0.8% month-on-month versus the forecast 1.0%. While six of nine spending categories showed growth, the alcoholic beverages and tobacco segment recorded the largest decline at 1.2%.
