With 2026 just around the corner, investors have flocked to Merck & Co. and S&P Global, among others. These names may be withdrawn. All three major averages rose this week, but the increase was shortened due to the Christmas holiday. The S&P 500 rose 1.4% to lead the way. The Nasdaq Composite Index rose 1.2%, along with the Dow Jones Industrial Average. However, some individual stocks may have broken the ski and are due for retracement. CNBC Pro used a stock screening tool to identify the most overbought and oversold stocks on Wall Street, as measured by the 14-day Relative Strength Index (RSI). A stock with a 14-day RSI above 70 is said to be overbought, meaning it could bounce back soon. On the other hand, a reading below 30 indicates that the stock is oversold and a rebound may be near. The table below shows stocks with an RSI above 70 and an increase of at least 3% for the week as of Friday morning. With an RSI of 73, one of the standout companies on the list was Merck. The pharmaceutical giant’s stock rose 5% for the week. Last week, BMO Capital Markets upgraded the stock to Outperform. “We believe investors are looking for further upside in MRK in the short term following stabilization of Gardasil estimates, recent US government agreement, and reversal in Merck sentiment following positive trials like Cadence,” said analyst Evan Sagerman. “While not all questions on behalf of Keytruda’s earnings have been resolved, there is still room for upside, despite the modest contraction (in earnings per share) due to (loss of exclusivity), and we see a reliable path to resolving most of the issues.” S&P Global is up 3% this week with an RSI of 72, another name on the most overbought list. Morgan Stanley listed the stop as one of its top candidates in its 2026 outlook released last week. “SPGI is already de-risking after providing growth and margin targets that are within pre-expected levels at its November investor day,” said analyst Toni Kaplan. On the other hand, several stocks were in oversold territory, suggesting they could be headed for a sharp rally. The table below shows stocks with an RSI below 30 as of Friday morning and which are down at least 1% since the beginning of the week. Lennar, which entered at RSI 28, is down 3% this week. Last week, several Wall Street institutions, including Bank of America, Evercore ISI and RBC Capital Markets, downgraded the homebuilder to underperform. Leif Jadrosic, an analyst at Bank of America, said Lennar’s downgrade came after Lennar’s fourth-quarter results and first-quarter outlook were significantly lower than expected. “We are lowering our FY2026/FY2027 EPS estimates by (24%)/(14%) to reflect the lower margin and revenue outlook,” he said. “LEN stock declined (5%) versus the S&P 500 (1%). We believe there is further downside risk as the stock continues to trade at a premium despite a lower ROTE relative to its peers and more pronounced margin and return on equity headwinds.” Lamb Weston, DataDog and Marathon Petroleum round out the list of oversold stocks.
