Northrop Grumman Stock is Overbought
- Northrop Grumman stock is among the most overbought on Wall Street.
- Stocks that have climbed rapidly are now considered overbought.
- Investors should be cautious with Northrop Grumman stock due to rapid rise.
On August 23, 2024, Wall Street experienced a modest uptick following Federal Reserve Chair Jerome Powell's indication that an interest rate cut may be on the horizon. The S&P 500 is projected to gain approximately 1.2% for the week, while the Dow Jones Industrial Average and Nasdaq Composite have risen by 1% and 1.3%, respectively. However, some analysts caution that certain stocks may be overbought, as indicated by their Relative Strength Index (RSI) readings above 70. Among the stocks showing elevated RSI levels is Northrop Grumman, an aerospace and defense contractor, which has seen its shares rise nearly 9% this year and 5% in August alone. With a 14-day RSI of 81.4, analysts suggest that the stock may be due for a correction. Despite this, UBS analyst Gavin Parsons has identified Northrop as a top pick in its sector, citing significant Pentagon contracts and increased defense spending as key drivers. Another notable stock is Kellanova, a snack manufacturer, which has surged over 44% in 2024 following its announcement of a $36 billion acquisition by Mars. The stock's RSI has reached an impressive 88.1, the highest among the stocks analyzed, reflecting its rapid ascent. The acquisition, valued at $83.50 per share, marks the largest deal on Wall Street this year. Other stocks flagged for being overbought include insurer Aflac and California utility Edison International, suggesting a broader trend of potential market corrections in the near future.