Watch These 4 Overbought Stocks As Market Rotation Continues

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While the overall market has enjoyed an impressive 17% year-to-date gain, recent rotations and sector-specific outflows have created a ripe environment for potential pullbacks. The semiconductor sector, for example, has seen a notable decline, with the SMH ETF down nearly 10% from its 52-week highs. Significant market rotations can often lead to overbought stocks pulling back as capital shifts from overvalued sectors to undervalued opportunities. For example, the IWM ETF, which represents small caps, has surged almost 12% this month, while the technology-focused XLK ETF is in the red. Get FOX alerts: Sign Up With this dynamic in mind, let's explore four stocks from various sectors that are currently overbought based on their RSI (Relative Strength Index) and might be due for a pullback. The RSI is a momentum oscillator that measures the speed and change of price movements, with readings above 80 typically indicating severe overbought conditions. Let's look at four stocks in overbought territory and determine if it's time to sell. Ford's Technical Analysis: Ripe for a Pullback Ford Motor Today F Ford Motor $14.55 +0.07 (+0.48%) 52-Week Range $9.63 ▼ $14.85 Dividend Yield 4.12% P/E Ratio 15.00 Price Target $14.18 Add to Watchlist Ford NYSE: F has climbed an impressive 23% this month, delighting shareholders. However, the stock's RSI now sits at 82.15, indicating it is in overbought territory. Additionally, Ford is approaching significant resistance on its higher timeframe near $15, a potential indicator of an imminent pullback. Investors might welcome a pullback as the stock's P/E remains in attractive value territory despite its recent surge. Impressively, Ford's forward P/E is only 7.46. However, on a fundamental basis, things are uncertain in the short term. The company is set to report its earnings next week. The consensus EPS forecast for the upcoming quarter is $0.62, compared to the reported EPS of $0.72 for the same quarter last year. From a technical analysis perspective, the stock seems ripe for a pullback, which could offer an attractive risk-reward entry given its valuation. However, with earnings around the corner, it might continue to run in anticipation of positive results. Ford Motor (F) Price Chart for Thursday, July, 18, 2024 Earnings Report Fuels Emergent BioSolutions' Rise Emergent BioSolutions Today EBS Emergent BioSolutions $11.43 -0.59 (-4.91%) 52-Week Range $1.42 ▼ $12.74 Price Target $8.00 Add to Watchlist Emergent BioSolutions Inc. NYSE: EBS, a life sciences company providing public health threat solutions, has experienced a meteoric rise this year. The stock is up over 400% year-to-date and 761% from its 52-week low, particularly soaring since its earnings report in May. The company reported $0.59 EPS for the quarter, significantly beating the consensus estimate of ($3.65). However, after nine consecutive days of gains, the stock's RSI has reached 89, indicating extreme overbought conditions. Analysts predict a significant downside, with a consensus price target of $8 forecasting nearly 34% downside, despite a Hold rating. With the stock stretched significantly from its major moving averages and an RSI nearing 90, now might be the opportune time for investors to take profits. Emergent BioSolutions Inc. (EBS) Price Chart for Thursday, July, 18, 2024 Potential Pullback for Better Entry Point in Fox FOX Today FOX FOX $34.61 -0.24 (-0.69%) 52-Week Range $25.82 ▼ $35.36 Dividend Yield 1.50% P/E Ratio 10.85 Add to Watchlist Fox Corporation NASDAQ: FOX, a major player in news, sports, and entertainment, has also shown impressive performance, with its stock up 25.6% year-to-date and over 12% this month alone. However, the stock's RSI of 81.12 suggests it is overbought. Technically, the stock's range expansion in the past two days indicates a potential near-term top as it deviates from its mean and major moving averages. Despite its attractive P/E of 10.88 and forward P/E of 9.18, which may appeal to value investors, a pullback could provide a better entry point for long-term gains, considering its 1.5% dividend yield and projected double-digit earnings growth. Fox Co. (FOX) Price Chart for Thursday, July, 18, 2024 Assessing Iron Mountain's Momentum and Market Position Iron Mountain Today IRM Iron Mountain $97.84 -1.38 (-1.39%) 52-Week Range $56.51 ▼ $100.78 Dividend Yield 2.66% P/E Ratio 148.24 Price Target $82.83 Add to Watchlist Iron Mountain Incorporated NYSE: IRM, a global leader in information management services, boasts a dividend yield of 2.6%. However, its P/E ratio of 151 and an RSI of 83.5 suggest it is highly overbought and vulnerable to a pullback. While analysts remain bullish with a Moderate Buy rating based on six analysts, the consensus price target of $82.83 forecasts a nearly 17% downside due to the stock's recent rapid ascent. Year-to-date, Iron Mountain has surged 41.7%, and over the past year, it has climbed more than 61%. A pivotal catalyst to watch that might influence the IRM's momentum is its upcoming earnings release, set for August 1. Iron Mountain Incorporated (IRM) Price Chart for Thursday, July, 18, 2024 Before you consider FOX, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and FOX wasn't on the list. While FOX currently has a "Strong Buy" rating among analysts, top-rated analysts believe these five stocks are better buys. 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