In trading on Tuesday, shares of Toll Brothers Inc. (NYSE:TOL) entered into overbought territory, changing hands as high as $21.44 per share. We define overbought territory using the Relative Strength Index, or RSI, which is a technical analysis indicator used to measure momentum on a scale of zero to 100. A stock is considered to be overbought if the RSI reading rises above 70. In the case of Toll Brothers Inc., the RSI reading has hit 71.3 — by comparison, the RSI reading for the S&P 500 ETF (SPY) is presently 60.1.
Investors could look at TOL's 71.3 reading as a sign that the recent heavy buying is overdue to take a breather, which could bring a pullback in the stock. The chart below shows the one year performance of TOL shares:
Looking at the chart above, TOL's low point in its 52 week range is $13.16 per share, with $22.42 as the 52 week high point — that compares with a last trade of $21.31.
TOL operates in the General Contractors & Builders sector, among companies like Standard Pacific Corp. (SPF) which is up about 1.1% today and has a current RSI reading of 59.2. Below is a three month price history chart comparing the stock performance of TOL, versus SPF.
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