Overbought Stocks To Watch As S&P 500 Hits Record Highs

Have you ever watched a stock soar to dizzying heights, only to wonder if it’s about to come crashing down? That’s the vibe in today’s market, where the S&P 500 is flirting with record highs, and certain stocks are screaming “overbought.” It’s like watching a party where everyone’s having a blast, but you can’t shake the feeling the music might stop soon. This week, names like eBay and Intel are raising eyebrows with their meteoric rises, but technical indicators suggest they could be vulnerable to a pullback. Let’s dive into what’s happening, why it matters, and how you can navigate this high-flying market without getting burned.

Why Overbought Stocks Are Making Headlines

The stock market is buzzing, and for good reason. The S&P 500, Nasdaq Composite, and Dow Jones Industrial Average all hit all-time highs recently, fueled by optimism around potential Federal Reserve interest rate cuts. Investors are riding a wave of confidence after positive consumer inflation data, with the S&P 500 up nearly 1% and the Dow climbing a solid 1.7% in a single week. But here’s the catch: when stocks climb too fast, they can enter overbought territory, a signal that a correction might be lurking around the corner. So, what does “overbought” even mean, and why should you care?

An overbought stock is like a car engine running too hot—it’s performing well, but it might need to cool off before it can keep going.

– Market analyst

In my experience, markets don’t climb in a straight line forever. When stocks get overbought, they’re often priced higher than their fundamentals justify, driven by hype or momentum. This is where tools like the 14-day Relative Strength Index (RSI) come in, helping traders spot when a stock’s momentum might be overstretched. An RSI above 70 typically flags a stock as overbought, hinting that a pullback could be on the horizon. Let’s break down the key players catching attention this week.

eBay: Riding High but at Risk?

First up, let’s talk about eBay. The e-commerce giant has been on a tear, with its stock jumping 8% in a single week and boasting a jaw-dropping 62% gain year-to-date. That’s the kind of performance that makes investors sit up and take notice. But with an RSI hovering around 77, eBay is firmly in overbought territory. So, what’s driving this rally, and should you be worried?

Recently, eBay posted a stellar second-quarter report, beating earnings and sales expectations while offering an optimistic outlook for the current period. It’s no wonder investors are piling in—eBay’s proving it’s more than just a relic of the early internet days. But here’s where I get a bit skeptical: when a stock climbs this fast, it often attracts short-term traders looking to cash out, which can lead to volatility. If you’re holding eBay, it might be worth keeping an eye on whether this momentum can hold.

• Recent Performance: eBay’s stock surged 8% in a week, with a 62% gain in 2025.
• RSI Signal: At 77, it’s well above the overbought threshold of 70.
• Key Driver: Strong earnings and a bullish forecast fueled the rally.

Intel: A Comeback Story with a Catch

Intel’s story is a bit more dramatic. After a brutal 2024 where it lost 60% of its value—its worst year on record—the chipmaker roared back with a 23% weekly gain, its best in over two decades. With an RSI of 71.3, Intel’s also flashing overbought signals. What sparked this turnaround? A report suggesting the U.S. government might take a stake in Intel to bolster domestic manufacturing sent the stock soaring. It’s a move that analysts say could be critical for national security.

But let’s pump the brakes for a second. While the news is exciting, Intel’s rally feels a bit like a sugar rush—intense but potentially short-lived. The company still faces challenges, and sentiment among analysts is lukewarm, with most rating it a hold. Perhaps the most interesting aspect is how quickly sentiment can shift in this market. One headline can send a stock flying, but it doesn’t always mean the fundamentals have caught up.

Government support could be a game-changer for Intel, but investors need to weigh the risks of a stock that’s moved this fast.

– Technology sector analyst

If you’re considering jumping into Intel, it might be worth waiting for a dip. Overbought stocks often cool off before resuming their climb, and patience could save you from buying at the peak.

Incyte: A Biotech Bet with Big Potential

Then there’s Incyte, a biopharmaceutical company that’s been quietly stealing the show. With an RSI around 80—the highest on our list—Incyte’s stock climbed 11% this week and is up 26% year-to-date. The buzz around Incyte comes from optimism about its myelofibrosis therapy, a treatment for a rare bone marrow disorder. Analysts are betting on positive updates later this year, which could keep the momentum going.

Here’s where I get a bit torn. On one hand, biotech stocks like Incyte can be incredible opportunities when clinical trials go well. On the other, they’re notoriously volatile, and an RSI of 80 is a screaming red flag. If you’re thinking about investing, it’s worth digging into the company’s pipeline and considering whether the hype matches the reality.

What Does “Overbought” Really Mean for Investors?

So, what’s the deal with overbought stocks? Are they a trap, or just a signal to tread carefully? The Relative Strength Index measures a stock’s momentum over a 14-day period, and when it crosses 70, it’s a sign that buyers might be getting exhausted. It’s not a guaranteed sell signal—sometimes stocks stay overbought for a while—but it’s a heads-up that the party might be winding down.

Think of it like a runner sprinting at full speed. They might keep going for a bit, but eventually, they’ll need to slow down to catch their breath. For investors, this means watching for signs of a pullback and being ready to act. Maybe it’s locking in profits, setting a stop-loss, or waiting for a better entry point.

1. Monitor RSI Trends: Check if the stock’s RSI continues to climb or starts to reverse.
2. Look at Fundamentals: Ensure the stock’s price aligns with its earnings and growth potential.
3. Plan Your Exit: Decide in advance whether to hold, sell, or buy more if a pullback occurs.

Navigating a High-Flying Market

With the S&P 500 at record highs, it’s tempting to jump into the market with both feet. But overbought stocks remind us that timing matters. I’ve seen too many investors get caught up in the hype, only to watch their gains evaporate when the market corrects. So, how do you play it smart?

First, diversify. Don’t put all your eggs in one basket, especially with stocks flashing warning signs. Second, consider using tools like stock screeners to identify opportunities beyond the overbought names. Finally, keep an eye on broader market signals—like the Federal Reserve’s next moves or economic data—that could shift sentiment.

Smart investing isn’t about chasing highs; it’s about knowing when to step back and wait for the right moment.

– Financial advisor

Personally, I think the market’s current optimism is exciting, but it’s also a reminder to stay disciplined. Stocks like eBay, Intel, and Incyte are worth watching, but don’t let FOMO drive your decisions. A balanced approach—mixing caution with opportunity—can help you navigate these highs without getting caught in a pullback.

Strategies to Protect Your Portfolio

So, what’s the game plan if you’re holding overbought stocks or eyeing new opportunities? Here are a few strategies I’ve found useful over the years:

• Hedge Your Bets: Consider options or stop-loss orders to limit downside risk.
• Take Profits Gradually: If a stock’s up big, sell a portion to lock in gains.
• Stay Informed: Keep tabs on news that could impact your stocks, like government policies or earnings reports.

One thing I’ve learned is that markets are unpredictable, but preparation can make all the difference. Whether it’s setting clear goals for your portfolio or staying disciplined with your trades, having a plan helps you avoid knee-jerk reactions when volatility hits.

The Bigger Picture: Market Sentiment and You

Zooming out, the current market rally is a fascinating mix of hope and caution. Investors are betting on a softer economic landing, with lower interest rates potentially boosting growth. But overbought stocks like eBay, Intel, and Incyte remind us that not every rally is sustainable. What’s the takeaway? Stay vigilant, use tools like the RSI to guide your decisions, and don’t be afraid to take a step back when things get too hot.

In my view, the most exciting part of investing is the challenge of balancing opportunity with risk. It’s like walking a tightrope—thrilling, but you’ve got to keep your focus. By understanding signals like overbought conditions, you can make smarter choices and keep your portfolio on solid ground.

Market Playbook for Overbought Stocks:
  50% Research and Monitoring
  30% Strategic Planning
  20% Patience

As the S&P 500 continues its climb, stocks like eBay, Intel, and Incyte are shining examples of what happens when momentum takes over. But with great gains come great risks. By staying informed, using technical tools, and keeping your emotions in check, you can navigate this market with confidence. What’s your next move?