When it comes to momentum investing, health care stocks can be a double-edged sword. While they offer promising potential, they can also be at risk of crashing. As of Feb. 2, 2024, four notable stocks in the health care sector are flashing a real warning for investors.
The Relative Strength Index (RSI) is a momentum indicator that compares a stock’s strength on up days to its strength on down days. It provides traders with a sense of how a stock may perform in the short term. An asset is typically considered overbought when the RSI is above 70.
Here’s a rundown of major overbought players in this sector:
PepGen Inc. (PEPG)
- On Jan. 8, PepGen announced significant progress in its clinical trial, leading to a 79% surge in its stock over the past five days. The company’s shares have reached a 52-week high of $20.00.
- RSI Value: 84.56
- PEPG Price Action: Shares of PepGen gained 23.5% to close at $12.39 on Thursday.
CalciMedica, Inc. (CALC)
- On Jan. 22, CalciMedica’s stock gained approximately 55% over the past month following a private placement announcement of up to approximately $55 million. The company aims to make a meaningful difference in the lives of critically ill patients. It currently has a 52-week high of $8.59.
- RSI Value: 70.24
- CALC Price Action: Shares of CalciMedica fell 16.7% to close at $6.20 on Thursday.
Oramed Pharmaceuticals Inc. (ORMP)
- On Jan. 22, Oramed Pharmaceuticals gained around 24% over the past five days. It has collaboratively entered into a joint venture agreement, causing its stock to reach a 52-week high of $5.25.
- RSI Value: 70.03
- ORMP Price Action: Shares of Oramed Pharmaceuticals fell 5.5% to close at $2.83 on Thursday.
FibroGen, Inc. (FGEN)
- On Jan. 25, FibroGen experienced a staggering 104% surge in its stock over the past five days following a significant announcement related to its pancreatic cancer treatment. The company’s shares have reached a 52-week high of $25.69.
- RSI Value: 86.52
- FGEN Price Action: Shares of FibroGen gained 23.4% to close at $2.37 on Thursday.
Investors should tread cautiously when considering these health care stocks. The inflated RSI values and recent price actions may indicate a looming correction. The health care sector could be in for a bumpy ride, with these stocks potentially leading the way.
Read More: Amazon, Apple And 3 Stocks To Watch Heading Into Friday
