Beware of Overbought Materials Stocks: Northern Dynasty Minerals and Ferroglobe

Two materials stocks, Northern Dynasty Minerals Ltd (NAK) and Ferroglobe PLC (GSM), are considered overbought according to the Relative Strength Index (RSI). NAK has an RSI value of 88.5, while GSM has an RSI value of 75.3. Both stocks have shown significant gains in recent days, with NAK up 14.4% and GSM up 17% over the past five days. Investors should be cautious of these stocks as they may be due for a correction.

Two materials stocks, Northern Dynasty Minerals Ltd (NAK) and Ferroglobe PLC (GSM), are currently trading in overbought territory according to the Relative Strength Index (RSI). NAK has an RSI value of 88.5, while GSM has an RSI value of 75.3. Both stocks have shown significant gains in recent days, with NAK up 14.4% and GSM up 17% over the past five days.

The RSI is a momentum oscillator that measures the speed and change of price movements. A reading above 70 is considered overbought, indicating that a stock may be overvalued and due for a correction. Investors should be cautious with these stocks, as they may experience a pullback in the near future.

Northern Dynasty Minerals, a mining company focused on gold and copper, has been under regulatory scrutiny due to its Pebble Project in Alaska. The Environmental Protection Agency (EPA) has vetoed the project, leading to ongoing legal battles. Despite these challenges, the stock has seen remarkable momentum, gaining 159% year-to-date H.C. Wainwright reiterates Buy rating on Northern Dynasty Minerals stock^[1]. However, the overbought condition suggests that investors should be prepared for a potential correction.

Ferroglobe PLC, a producer of silicon metal and silicon-based alloys, has benefited from favorable preliminary rulings by the U.S. Department of Commerce in its investigations into unfairly priced and subsidized silicon metal imports. These rulings have bolstered the stock's performance, with shares soaring 11% in the last trading session Ferroglobe (GSM) Moves 11.0% Higher: Will This Strength Last?^[2]. While the recent gains are encouraging, the overbought condition indicates that investors should monitor the stock closely for signs of a potential pullback.

In summary, while Northern Dynasty Minerals and Ferroglobe PLC have shown impressive gains, investors should be cautious due to the overbought conditions indicated by their RSI values. It is essential to monitor these stocks and consider the broader market conditions when making investment decisions.