When a stock gets too popular too quickly, it often becomes its own worst enemy. That's the dynamic playing out right now with two utilities sector names that momentum traders might want to approach with caution.
The Relative Strength Index (RSI) is basically a mathematical way of asking: "Has this stock been winning too much lately?" It compares how strong a stock is on up days versus down days. When the RSI climbs above 70, it typically means the stock is overbought and potentially due for a breather. Think of it like a rubber band stretched too far.
As of December 23, 2025, two utility stocks are lighting up the overbought radar.
Enlight Renewable Energy Ltd
Enlight Renewable Energy Ltd. (ENLT) presents an interesting contradiction. On December 8, JP Morgan analyst Mark Strouse downgraded the stock from Neutral to Underweight while maintaining a $35 price target. Despite that vote of no confidence, the stock has surged approximately 11% over the past five days.
The numbers tell the story of a stock that might be getting ahead of itself. With an RSI reading of 72, Enlight Renewable is firmly in overbought territory. Shares climbed 3.9% to close at $43.44 on Monday, pushing dangerously close to the stock's 52-week high of $44.01.
The company scores a remarkable 96.81 on momentum metrics, which makes sense given the recent price action. But that high momentum comes with a tradeoff: the value score sits at just 15.56, suggesting you're paying up for the rally.
Kenon Holdings Ltd
Kenon Holdings Ltd. (KEN) is showing even more extreme overbought conditions, with an RSI of 75.4. The stock has gained roughly 13% over the past month, and on Monday, shares added another 0.7% to close at $64.73, just shy of the 52-week high of $64.85.
What makes this rally particularly notable is that it's happening despite deteriorating fundamentals. On December 3, Kenon reported quarterly earnings of 45 cents per share, down from 81 cents per share in the same period last year. That's a significant earnings decline, yet investors have been bidding up the stock anyway.
The disconnect between falling earnings and rising stock prices is precisely the kind of situation that makes overbought readings worth paying attention to. Sometimes momentum can carry a stock higher regardless of fundamentals, but that rubber band tends to snap back eventually.
For traders who use technical indicators as part of their strategy, these elevated RSI readings suggest it might be time to take some chips off the table or at least think twice before adding new positions.