Five stocks in the information technology sector may be waving a cautionary flag to momentum-driven traders as of Feb 6, 2024.

Comparing a stock’s strength on up and down days, the RSI (Relative Strength Index) serves as a momentum indicator. When the RSI surpasses 70, a stock is deemed overbought. This indicator helps traders anticipate short-term stock performance.

Here’s a look at the high-flying tech stocks potentially due for a downturn.

Everbridge, Inc. EVBG

• Everbridge announced acquisition by Thoma Bravo for $1.5 billion on Feb. 5, sparking a 23% gain over five days. The stock reached a 52-week high of $35.55.
• RSI Value: 79.24
• EVBG Price Action: Shares surged 18.4% to close at $28.17 on Monday.

Super Micro Computer, Inc. SMCI

• Super Micro Computer reported exceptional second-quarter financial results on Jan. 29, propelling a staggering 107% surge over a month to a 52-week high of $670.00.
• RSI Value: 91.56
• SMCI Price Action: Shares soared 14.4% to close at $663.35 on Monday.

Coherent Corp. COHR

• Coherent posted exceptional quarterly results on Feb. 5, driving a 17% surge over a month to a 52-week high of $60.46.
• RSI Value: 76.24
• COHR Price Action: Shares edged up 0.6% to close at $49.42 on Monday.

NVIDIA Corporation NVDA

• Goldman Sachs raised its price target on NVIDIA from $625 to $800 and added it to the Conviction List on Feb. 5. The stock rallied around 33% over a month to reach a 52-week high of $694.97.
• RSI Value: 85.97
• NVDA Price Action: Shares surged 4.8% to close at $693.32 on Monday.

Taiwan Semiconductor Manufacturing Company Limited TSM

• Taiwan Semiconductor Manufacturing reported fourth-quarter revenue of $19.62 billion on Jan. 18, surpassing the consensus of $19.45 billion, and an EPS of $1.44, beating the consensus of $1.37. The stock surged around 16% over the past month, reaching a 52-week high of $119.54.
• RSI Value: 72.05
• TSM Price Action: Shares rose 2.6% to close at $118.79 on Monday.

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