Retail industry veteran Seth Golden recently warned that, according to a widely used oscillator Williams %R, the S&P 500 has been overbought for an entire year.
Golden, a hedge fund consultant who previously worked for household names such as Target and now-defunct Bed Bath & Beyond, pointed out that this is just the 23rd time in history that this has occurred.
Based on historical data he shared in a post on X, he pointed out that when this happened, it continued the same trend for the rest of the year — posting a fourth-quarter median return of 5.29%.
Williams %R, often dubbed the Williams percent range, is a momentum indicator. It measures the overbought and oversold levels on a scale from 0 to 100. A reading above -20 is overbought and a reading below -80 is oversold.
Golden used a 28-month parameter, an industry standard for this indicator.
Looking deeper into the list of overbought stocks brings an interesting mix of domestic and foreign catalysts.
Lockheed Martin's (NYSE:LMT) presence on this list is unsurprising. The leading aerospace and defense manufacturer's stock hit a fresh all-time high, reaching $609 and giving it a market cap of over $144B. The firm benefits from increased defense spending during escalating global conflicts and with a new multi-billion U.S. Navy contract it landed last Thursday. Despite a hefty $19.26B debt, the firm has the balance sheet to easily manage it, plus pay a reliable 2.1% dividend. Its Williams %R overbought score is currently -11.41.
Next on the list is Lowe's Companies Inc (NYSE:LOW), a North Carolina-based retailer specializing in home improvement. It recently hit a new all-time high of $274.16. Along with other home improvement stocks, Lowe experienced a surge following the FED's rate cut. Still, this strong performance is surprising, given the firm's revenue decline of nearly 10% year over year and dimmed future growth projections. Its Williams %R overbought score is currently -5.71.
Entergy Corp (NYSE:ETR) has been a utility industry standout, delivering an almost 30% return year-to-date. Despite such numbers, the stock trades at a reasonable P/E ratio of 15.9x, below some of its peers like Exelon or FirstEnergy.
Entergy provides electric power to the southern U.S. states, benefiting from rapid energy growth in states such as Texas. Investors expect the company to scale with its target market, with a booming population and increased industrial activity prompting higher energy consumption. The stock's Williams %R overbought score currently stands at -7.41.
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