Several software companies could be due for a pullback after the stock market's roaring rally this week, fueled by president-elect Donald Trump's election victory as well as robust quarterly earnings reports. Major U.S. indexes are on track for major wins this month, with the S & P 500 up roughly 5% and the 30-stock Dow Jones Industrial Average higher by 5.3% — putting both on track for their best gain in a year. The Nasdaq has jumped 6.4% so far in November.
Pro screened for stocks that are considered technically overbought using their 14-day relative strength index, or RSI, a momentum indicator used in technical analysis that measures the speed and magnitude of a stock price. Companies with a 14-day RSI higher than 70 are generally regarded as overbought, signaling a potential pullback ahead, while a 14-day RSI below 30 suggests a stock is oversold and may be poised for a bounce higher.
Pro screener: Packaged food and consumer goods companies General Mills , Coca-Cola and Keurig Dr Pepper are now considered oversold. Consumer staples has been one of the slower-growing sectors this year, and is down 1.7% this quarter. But higher prices and expectations of normalizing pricing, which helped Coke guide its organic revenue growth this year to the high end of a prior forecast, could lead the stocks higher.