Two days of big gains for the market plus positive reactions to earnings reports has pushed a number of Dow 30 stocks into extreme overbought territory. Below is our trading range screen for the 30 Dow stocks which highlights overbought/oversold levels. As shown, Caterpillar (CAT), Home Depot (HD), McDonald’s (MCD), Microsoft (MSFT), United Tech (UTX), and Visa (V) are all trading at extreme overbought levels, which means they’re more than two standard deviations above their 50-day moving averages. CAT, MCD, MSFT, and UTX are trading three standard deviations above their 50-days. Three standard deviations is quite extended for a mega-cap blue-chip name.
On the flip side, there are five Dow stocks that are currently oversold. Verizon (VZ) is at the most extreme level, trading 3 standard deviations below its 50-day.