With the DJ Transports and the Russell 2000 each trading down more than 1% Wednesday, there is an increasing amount of chatter among traders that the market may be ready to see its first meaningful pullback of the year. If that is the case, stocks that are the most overbought are potentially the most vulnerable. With that in mind, the table below lists the thirty stocks in the S&P 500 that are the most overbought based on the number of standard deviations they are each trading above their respective 50-day moving averages.
Following the resignation of its co-founder and CEO Aubrey McClendon and a 6% rally in the stock, Chesapeake Energy (CHK) is the most overbought stock in the S&P 500 at a level of 3.51 standard deviations above its 50-day moving average. Right behind CHK are several other Energy sector stocks (DVN, VLO, HES, PSX, and MPC), many of which are involved in the refining space. Shares of Netflix (NFLX) have nearly doubled this year, but the stock is only the seventh most overbought stock in the S&P 500, trading 3.02 standard deviations above its 50-day moving average.
One thing you may notice about a lot of the names on this list is that not all of them are so-called 'high-flying' stocks. The reason for this is that rather than measure just the percentage that each stock is trading above its 50-day moving average, using standard deviations also takes into account the stock's relative trading range. So, more accurately, we are measuring the stocks that are most overbought or out of whack relative to their own recent trading ranges.