Investors holding stocks on the S&P 500 (SPY) may refer to RSI, or relative strength index, to gauge overbought conditions. Although Palantir (PLTR) looks overbought, the military AI software developer has plenty of growth potential ahead.
In the communications sector, Disney (DIS) shares surged after posting quarterly results. Its RSI is over 81 and valuation levels are higher than the sector median. Its P/E is 42.5 times, more than double the sector’s 20 times P/E. Similarly, Netflix (NFLX) shares are trading at a premium. Near a 52-week high, investors are betting that the firm will increase its monthly active user metric. The firm reported 70 million MAUs globally for its ad business.
The Christmas NFL games should help Netflix grow its user activity. However, new viewers may cancel their subscriptions after the games are over.
Blackstone (BX), which trades near a 52-week high, is in overbought territory for a good reason. It most recently announced it would take Retail Opportunity Investments private. This is an all-cash deal worth around $4 billion, including debt.
The acquisition strengthens Blackstone’s investments within the retail REIT sector. Demand is strong while supply is low. Like with Blackstone’s previous acquisitions, expect this deal to add meaningfully to results.