FOMO Spirit Pushes ‘Risk-On’ to Extremes Again — These 5 Mega Stocks Are Flashing Technical or Fundamental Warning Signs

The stock market is undergoing a chaotic phase, with the S&P 500 surging 22% from its recent low in just one month—primarily fueled by trade deal optimism and massive investment “promises” from Saudi Arabia and Qatar, which far exceed their combined annual GDP. These developments have reignited a powerful wave of FOMO, as investors scramble not to miss out on further gains. President Trump’s assertion that the market “could be a lot higher” has only poured fuel on the fire, pushing technical indicators into extreme territory. However, in such a volatile environment, swift decision-making is critical, as the rally appears increasingly unsustainable. Investors should remain cautious, especially with several tech giants flashing warning signs through overstretched technicals and shaky fundamentals.

Microsoft (MSFT)

There are several concerns surrounding MSFT, as the software giant now holds the title of the world’s most valuable company. During President Trump’s recent Middle East visit, dozens of CEOs were invited—Amazon, Meta, Google, Tesla, OpenAI, IBM, among others—and many secured massive contracts. Microsoft, however, was notably absent. While both CEO Satya Nadella and Bill Gates have previously dined with Trump at Mar-a-Lago, the relationship appears to have cooled since. This raises doubts about whether the Trump administration will support Microsoft moving forward.

Meanwhile, OpenAI, SoftBank, and Oracle’s expanding ‘Stargate’ project—which is now exploring data center development in the Middle East—further sidelines Microsoft from the AI spotlight. Although Microsoft remains OpenAI’s largest investor, the partnership seems to have drifted. At the same time, Oracle, a major cloud competitor, is gaining ground. Microsoft has also scaled back on data center leasing in recent months, which adds to concerns about its long-term AI infrastructure strategy.

Technically, Microsoft is approaching a key resistance level and appears stretched. The stock has returned to its December highs and needs stronger momentum to break through. RSI is hovering around ~91—an extremely overbought level. While shares have seen an impulsive rally over the past month, largely driven by a strong Q1 report, they still lack the fundamental support needed for a sustained breakout. As such, we remain cautious at current levels.

Apple (AAPL)

Apple shares rallied following the temporary U.S.-China trade deal; however, the impact may be limited. First, Trump’s suspension of certain tariffs doesn’t directly benefit Apple, as the 20% tariff on Chinese-made goods remains in place. Apple still has to pay a 20% import tax on products assembled in China—including iPhones, iPads, and other devices—since China remains its primary manufacturing hub.

Second, while Apple is accelerating its shift to plants in India and Southeast Asia to avoid tariffs, replicating the highly skilled labor force and complex supply chain built in China isn’t feasible in the short term. High-end models like the iPhone Pro and Pro Max require more intricate assembly and testing, forcing Apple to continue relying on Chinese manufacturing. Ultimately, Apple will need to absorb the additional cost of importing from China, as well as the expense tied to transitioning its production. It's also important to note that Trump’s tariff policy isn’t necessarily designed to push Apple out of China—but rather to encourage domestic U.S. manufacturing, which poses even greater challenges due to higher labor costs and limited infrastructure.

The consensus is that Apple will likely raise prices for the iPhone 17 lineup to cover these rising costs. However, this raises concerns, as current AI capabilities haven’t yet proven compelling enough to drive sales. Consumers may hesitate to pay a premium simply to absorb tariff-related increases. So far, many have rushed to purchase iPhones in anticipation of future price hikes. But the current dynamic could mirror what happened in 2020–2022, when the pandemic initially boosted demand—only to be followed by a sharp decline as consumers pulled back after upgrades.

Technically, Apple is approaching a key resistance level last tested just before its Q1 earnings release. The stock will require additional momentum to break through and confirm a bullish continuation. However, with fundamentals still lacking a meaningful catalyst, investors should remain cautious at current levels.

Broadcom (AVGO)

We just added AVGO to our long list on Monday, as its solid fundamentals and exposure to AI spending positioned it as a strong candidate in the AI space—and the shares have indeed surged since then. However, from a technical perspective, the stock now appears overextended. Bulls may start locking in gains and wait for a pullback before reentering.

AVGO’s RSI has climbed to 91.57, signaling a highly overbought condition as investors pile into AI-related names. The company’s leadership in providing customized AI chips to Amazon, Google, Meta, and others has fueled recent enthusiasm. That said, the last time AVGO’s RSI reached this level was in December, when the stock dropped 13% in just three days. Now, with the recent rally pushing the stock into resistance territory, the technical setup further supports the likelihood of a short-term pullback.

On the fundamental side, although Broadcom’s CEO joined Trump’s delegation to the Middle East, the company may not benefit as much as Nvidia or AMD. That’s because the region’s sovereign wealth funds are focused on acquiring more standardized and advanced AI chips to build infrastructure—not customized solutions. In this context, AVGO’s recent gains may reflect more of a free ride on the broader chip hype than true demand growth.

Dell (DELL)

Dell is another name benefiting from the U.S.-China thaw and is potentially positioned to gain from Trump’s Middle East diplomacy given its past AI factory partnerships with Nvidia. But those opportunities remain speculative.

More notably, technical signals mirror previous danger zones.

Dell’s RSI closed around 92, indicating extreme overbought sentiment. In late May 2024, a similar RSI reading preceded a 22% plunge in just two days, triggered by disappointing earnings. Likewise, in March 2024, the stock’s RSI hit ~94 before dropping 15% over two weeks.

This pattern suggests Dell’s inflated RSI is a reliable measure of investor overenthusiasm, making it particularly vulnerable to a sharp correction. Of all the names on this list, Dell's RSI appears most directly linked to near-term price risk.

Bank of America (BAC)

Bank of America shares are also showing signs of overheating, with an RSI of 93—driven by renewed investor optimism that a stronger economy will support earnings. But extreme bullish sentiment often precedes a cooldown.

In the past three instances where BAC’s RSI exceeded the high-80s, the stock corrected by at least 2–3%. The most severe instance came in July, with a 21% drop over one month as Berkshire Hathaway aggressively sold its position.

While BAC doesn’t face the same speculative risks as tech names, the technical setup still suggests a short-term pullback is likely. That said, the opportunity to short BAC may be less compelling compared to the more hyped-up tech stocks mentioned above.