The S&P 500 overall underperformed in December, and certain stocks appear poised for further pullback. At Friday’s close, broad market indexes were down 0.6% for the week, temporarily halting the stock market’s gains since President-elect Trump returned to the White House last month. The Dow Jones Industrial Average fell 1.8% for the week. But the tech-heavy Nasdaq rose 0.3% for the week. CNBC Pro used its stock screener tool to identify the most overbought and oversold stocks on Wall Street based on the 14-day relative strength index (RSI). Stocks with a 14-day RSI above 70 are considered overbought, indicating that the stock may be selling off soon. Conversely, a reading below 30 typically indicates a stock is oversold, signaling a possible rebound in the future. This week’s overbought list is particularly dominated by technology stocks, including the “Seven Heroes” giant Apple, which has an RSI of 74. Earlier this week, both Bernstein and Morgan Stanley reiterated their overweight ratings on the stock, with the latter calling Apple a top pick in 2025. Optimistic: 1) Apple’s smart growth is accelerating and the iPhone replacement cycle will begin in fiscal 2026; 2) Service growth remains at double digits; 3) Gross profit margin expands,” Morgan Stanley wrote. Tesla, a member of The Magnificent Seven, has an RSI of 77 and is also on the list. The electric car maker is part of a so-called Trump deal due to CEO Musk’s close ties to the president-elect. The stock has soared more than 73% since the election, accounting for nearly all of the stock’s annual gains after lagging other tech giants for much of the year. On Friday, the stock closed at a record high. “The stock is reacting to the Trump rally,” Roth MKM analyst Craig Irwin told CNBC’s “Squawk on the Street” last week. Irwin previously wrote in a note, “Musk’s interest in Trump “Public’s sincere support could double Tesla’s fan base and increase the credibility of demand changes.” Enterprise software company ServiceNow has an RSI of 73. On Thursday, analyst Jackson Ader downgraded the stock to a sector weight rating from overweight. “We believe ServiceNow has been an early leader in artificial intelligence and remains the most flexible software platform,” he wrote. “Subscription growth is likely to reach 20% for many quarters to come, and free cash flow margins may exceed 30%, but currently we see little room for upside to the company’s price-to-earnings ratio and believe there have been two declines in recent months. A key risk. Shares of ServiceNow have soared 58.7% in 2024. Its shares have lagged the broader market, rising just 4.4% in 2024. Other names on the list of the most oversold stocks include pharmaceutical giant Johnson & Johnson and energy company Con Edison. . — CNBC’s Fred Imbert contributed to this report.
