Benzinga Identifies 3 Communication Services Stocks With Overbought Technical Indicators

Benzinga’s Edge Analytics platform identified three stocks within the communication services sector exhibiting overbought technical conditions as of January 12, 2026 [1]. The screening methodology relies primarily on Relative Strength Index (RSI) readings exceeding the 70 threshold, a commonly used momentum indicator that suggests an asset may be experiencing unsustainable buying pressure. This type of analysis targets investors who incorporate technical momentum signals into their trading decisions, particularly those utilizing contrarian or mean-reversion strategies.

The RSI metric, developed by J. Welles Wilder, measures the speed and magnitude of recent price changes to evaluate overbought or oversold conditions. Readings above 70 traditionally indicate that an asset may be overbought and vulnerable to a pullback, while readings below 30 suggest oversold conditions potentially preceding a rebound [1]. However, it’s important to note that these indicators can remain elevated (or depressed) for extended periods during strong trends, and they do not predict the timing or magnitude of potential corrections.

is trading at $33.44, representing a 2.67% gain, with an RSI reading of 74.5—the highest among the three stocks identified [1]. The stock is trading within 0.09% of its 52-week high of $33.47, indicating extremely stretched price action. Notably, SCHL carries a negative price-to-earnings ratio of -176, meaning the company is currently unprofitable on a trailing twelve-month basis [1]. Benzinga’s Edge Rankings show SCHL has a Momentum score of 92.14 but a Value score of only 49.04, highlighting a significant divergence between technical strength and fundamental valuation [1]. This disparity suggests the stock’s recent performance is momentum-driven rather than fundamentals-based, which increases vulnerability to rapid reversals if buying pressure subsides.

presents an unusual technical picture requiring careful interpretation. The stock is trading at $19.34, up 4.26%, with an RSI of 70.1—barely above the overbought threshold [1]. However, the 52-week high listed as $34.45 represents a significant premium to current trading levels, suggesting either a substantial price decline during the year, a potential stock split, or possibly a data discrepancy requiring verification. With a P/E ratio of 17.12, IRDM exhibits more reasonable fundamental metrics compared to its sector peers in this analysis [1]. Investors should confirm the accuracy of the 52-week high figure against official company filings before drawing conclusions from this data.

is trading at $95.26, up 4.26%, with an RSI of 70.2 and a 52-week high of $97.20—approximately 2% above current levels [1]. Similar to SCHL, SPHR is unprofitable with a negative P/E ratio of -9.73 [1]. Critically, this bearish technical thesis conflicts with recent analyst action: Seaport Global upgraded SPHR to Neutral-to-Buy on January 9, 2026, just three days before the Benzinga analysis, with a price target of $106 [1]. This represents approximately 11% upside from current levels, directly contradicting the suggestion of imminent “implosion” risk.

The broader market environment provides important context for interpreting these technical signals. As of the analysis date, the S&P 500 was showing modest gains of approximately 0.56% week-to-date [0]. When major indices exhibit steady, measured gains while individual stocks show extreme overbought readings, the relative weakness in those overextended names becomes more notable. However, the overall market backdrop does not suggest systemic stress that would typically accompany sector-wide corrections.

The communication services sector has experienced varied performance across its constituents, with some segments (notably streaming and digital platforms) benefiting from secular tailwinds while others face competitive pressures and structural challenges. The three stocks identified represent different sub-segments within this diverse sector, making a unified technical thesis somewhat tenuous. Investors should consider company-specific fundamentals alongside technical indicators rather than treating sector-wide screenings as reliable predictors.

The reliance on RSI as a primary screening tool, while common in technical analysis, presents several important limitations that investors should consider. RSI is a momentum oscillator that measures the magnitude and speed of price changes, but it does not incorporate volume or fundamental factors into its calculation. A stock can remain in overbought territory (RSI > 70) for extended periods during strong uptrends, and the indicator provides no guidance on the timing or severity of potential corrections. Historical analysis shows that stocks can continue appreciating significantly after initially entering overbought territory, particularly during strong market regimes [1].

The Benzinga analysis appears to apply a uniform RSI threshold without accounting for stock-specific characteristics or historical volatility patterns. Stocks with naturally higher historical volatility may spend more time in overbought and oversold territory, reducing the predictive value of extreme readings. Similarly, stocks that have recently experienced positive catalysts (earnings beats, strategic announcements, analyst upgrades) may sustain elevated readings longer than the technical model predicts.

A critical insight from this analysis is the significant gap between technical momentum and fundamental valuation for two of the three identified stocks. SCHL’s combination of a 92.14 Momentum score and 49.04 Value score [1] exemplifies a common pattern where price appreciation has outpaced underlying business fundamentals. While momentum strategies can be profitable in the short term, this divergence increases risk when sentiment shifts or when new information challenges the sustainability of the price trend.

The unprofitable status of both SCHL and SPHR adds another layer of risk consideration. Without earnings support, these stocks rely entirely on narrative and sentiment for valuation, making them more susceptible to rapid sentiment reversals. The negative P/E ratios indicate these companies are not generating positive earnings, so traditional valuation frameworks based on earnings multiples do not apply—a factor that technical-only analyses may underweight.

The Seaport Global upgrade of SPHR to Neutral-to-Buy with a $106 price target [1] creates a direct contradiction with the bearish technical thesis. This upgrade occurred merely three days before the Benzinga analysis, suggesting that at least some professional analysts view the stock favorably despite the elevated RSI reading. Price targets represent professional expectations of future value, and a target of $106 implies approximately 11% upside from current levels—hardly consistent with an imminent “implosion” scenario.

The IRDM data discrepancy presents a more fundamental issue for analysis integrity. A 52-week high of $34.45 versus a current price of $19.34 suggests either a 44% decline from highs, a stock split that hasn’t been properly adjusted in the data feed, or an error in reporting [1]. Before any actionable conclusions can be drawn from this screening, investors should verify the accurate 52-week high figure through official sources such as SEC filings, company press releases, or verified market data providers.

: The most significant limitation of this analysis is that RSI readings above 70, while historically correlating with elevated correction risk, do not reliably predict when or if a correction will occur. Many stocks continue appreciating for extended periods while remaining technically overbought, particularly during strong market trends. Investors acting on this screening alone risk exiting positions prematurely or entering short positions that experience continued adverse price action.

: The IRDM 52-week high discrepancy represents a material data quality issue that undermines confidence in the screening methodology [1]. If the 52-week high figure is inaccurate, the analysis conclusions may be similarly compromised. At minimum, this highlights the need for independent verification of technical screening results against primary data sources before acting.

: The Seaport Global upgrade of SPHR demonstrates that professional analysts may hold views directly opposing bearish technical signals [1]. Given that analysts typically have access to management guidance, industry intelligence, and detailed fundamental analysis that technical screens cannot capture, this contrary view warrants serious consideration.

: The unprofitable status of SCHL and SPHR means these stocks lack traditional valuation support [1]. During periods of market stress or risk aversion, unprofitable growth stocks often experience disproportionate selling pressure, but the timing and triggers for such rotations remain unpredictable.

: For traders with appropriate risk tolerance and short investment horizons, overbought conditions in otherwise fundamentally acceptable stocks can present short-term trading opportunities. The elevated RSI readings may attract contrarian traders looking to profit from short-term mean reversion, though this strategy carries substantial execution risk.

: The SPHR upgrade by Seaport Global presents an opportunity to investigate why a professional analyst would recommend a stock with an RSI above 70 [1]. Understanding the fundamental thesis behind this upgrade could reveal insights not captured by technical analysis alone.

This analysis is based on the Benzinga report [1] published on January 12, 2026, which screened the communication services sector for stocks with overbought technical indicators. Three stocks were identified: SCHL ($33.44, RSI 74.5), IRDM ($19.34, RSI 70.1), and SPHR ($95.26, RSI 70.2). All three stocks are trading near their 52-week highs and exhibit RSI readings above the 70 threshold typically associated with overbought conditions.

Important caveats affect the reliability of this screening. IRDM’s 52-week high of $34.45 versus current price of $19.34 indicates a significant data discrepancy requiring verification through official sources [1]. SPHR received a Seaport Global upgrade to Neutral-to-Buy on January 9, 2026, with a $106 price target—contradicting the bearish thesis [1]. Both SCHL and SPHR are unprofitable with negative P/E ratios, lacking traditional earnings-based valuation support [1]. The RSI indicator, while widely used, has limitations in predicting timing and magnitude of corrections and may generate false signals during strong trends.

Market data indicates the S&P 500 was up approximately 0.56% week-to-date as of the analysis date [0], suggesting a relatively stable broader market backdrop that does not support systemic sector concerns. Benzinga’s Edge Rankings data shows SCHL has a Momentum score of 92.14 but a Value score of only 49.04, highlighting the technical-fundamental divergence [1].

Investors should treat this screening as a starting point for further investigation rather than actionable investment advice. The analysis represents opinion-based technical screening that requires independent verification of data accuracy, consideration of contrary analyst views, and integration with fundamental research before any investment decisions are made.