Concerns over a possible recession and the state of regional banks have investors looking for places to hide, and many of them are running to the same refuge. The S & P 500 posted its second straight weekly decline, falling 0.3% this week. The SPDR S & P Regional Banking ETF (KRE) dropped 5.2% for the week, after PacWest said deposits fell sharply — stoking fear that more banks could suffer the same fate as Silicon Valley Bank, Signature and First Republic. Given this backdrop, investors have turned to several consumer staples — traditionally seen as defensive stocks — to shore up their portfolios. However, some of those names are now overbought, based on their relative strength index, a measure of momentum in technical analysis. A stock is considered overbought if its 14-day RSI goes above 70, signaling investors should consider easing their exposure. A 14-day RSI under 30, however, signals that a stock is oversold, meaning there may be a buying opportunity. Mondelez , PepsiCo and Molson Coors — all staples — are the most overbought S & P 500 names through Friday’s session. Mondelez, the company that makes Oreo cookies and other snacks, has an RSI of 89.2, while PepsiCo and Molson Coors have RSI scores of more than 84 each. Shares of Mondelez have rallied more than 16% year to date, easily outperforming the S & P 500’s 7.4% advance. This month, the stock is up 1.5%, while the broader market index has lost 1.1%. PepsiCo and Molson are also outperforming the S & P 500 year to date. MDLZ YTD mountain MDLZ in 2023 However, analysts think there’s little-to-no upside in these stocks right now. The average analyst price targets for Mondelez and PepsiCo imply upside of 3% for each name, per FactSet. As for Molson, analysts on average expect the beer maker to fall 1%. Another deeply overbought stock is Republic Services . The waste management company has soared more than 14% in 2023. However, just 40% of analysts have a buy rating on the name. There are, however, some names that are deeply oversold. Estee Lauder is the most oversold S & P 500 stock. It has a 14-day RSI of 14.98. The stock has struggled this year, losing nearly 20%. Earlier this month, the cosmetics maker reported fiscal third-quarter adjusted earnings that missed analysts’ expectations and cut its full-year profit guidance. Argus Research analyst John Staszak downgraded Estee Lauder to hold from buy this week, citing concern over “the slow pace of recovery in China and in the travel retail segment in Asia, where inventories are rising.” Despite Staszak’s downgrade, more than half of analysts covering the stock rate Estee Lauder as a buy. The average price target also suggests shares could rally 21.3% through Thursday’s close. Enphase Energy is also deeply oversold, with an RSI of 16.42. Shares of Enphase have tumbled more than 36% year to date. Bank of America analyst Julien Dumoulin-Smith downgraded Enphase to underperform from neutral last month, noting that “headwinds to near term growth are bolstered by weak sell through trends in the distributor channel and inflexible cash advance terms to installers, which leave ongoing challenges throughout 2023.” “These sit atop interest rate driven challenges on US solar origination that ENPH cannot avoid, given its dominant market share to loan-heavy contractors,” the analyst added. However, the stock could be in for a big rally based on the average analyst price target, which points to a possible gain of 50%. — CNBC’s Michael Bloom contributed reporting.
