Major U.S. stock indices rose to new all-time highs last week on the hopes of finally securing a rate cut from the Federal Reserve in September. However, the rally seems much higher than you’d expect from a possible 25-basis-point cut, which is the most the Fed is likely to do next month.
For investors, moments like this provide a good opportunity to review their holdings and identify any winners that might have gotten overextended. So let’s take a look at the best way to identify that type of stock.
Labor Day Weekend: Save $1000 Or Pay More Forever
After Monday, same system costs $1000 more. Matt Maley's recent big winners show why members stay year after year. Get real-time trade alerts + professional exit strategies.
Save $1000 This Weekend
One method of identifying potential short-term pullbacks is the Moving Average Convergence Divergence indicator, better known by its acronym MACD. The MACD is a momentum oscillator similar to the Relative Strength Index (RSI), but it uses the 12- and 26-day exponential moving averages to gauge trend strength, and then a 9-day EMA (called the signal line) to measure divergences between the two.
These data points are plotted on a histogram, which grows and shrinks as trend strength changes. When these EMAs cross, it’s considered a bearish or bullish signal, depending on the direction of the trend.
Today, we'll look at five stocks that have posted significant gains over the last three months that have made bearish cross signals on the MACD, indicating that it might be time to take profits before a change in momentum.
Lam Research Corp.
Lam Research (NASDAQ:LRCX) has been a "picks and shovels" play in the semiconductor industry, as it provides crucial wafer fabrication equipment, including etch and deposition, to global clients such as Samsung, Intel, and Micron. The company posted an impressive top- and bottom-line earnings beat on July 30, including an EPS figure that came in 10% higher than analysts' expectations. Lam Research has also boosted gross margins for four consecutive quarters. LRCX likely has plenty of long-term potential, but technical signals are starting to show waning momentum.
A bearish cross on the MACD formed earlier this month, and the stock has been hovering near the trendline it has used for support since the removal of the Liberation Day tariffs. Momentum has been fading, and weakness is beginning to become evident on the MACD. LAM investors took profits earlier this month following the earnings bump, and now the stock is at a crossroads. More downside from here would not be surprising.
Arista Networks Inc.
Artista Networks (NYSE:ANET) is another AI-adjacent company that provides Ethernet equipment and software solutions to hyperscalers like Meta and Microsoft. The stock is up 45% over the last three months, and continues to post strong earnings quarter after quarter. But like most AI plays, the expectations for ANET are high, and the stock's P/E ratio of 52.25 hints at overvaluation.
Bearish technical signals are also starting to appear. The bearish MACD cross materialized last week after two straight months of strong upward momentum, and the RSI reached Overbought territory before breaking down through a trendline. Like LRCX, the stock received a post-earnings bump on August 6, but now profit-taking is underway as momentum fades.
Newmont Corp.
Newmont (NYSE:NEM) is the largest gold miner on the planet, with 17 different mining operations in its portfolio. The company sells millions of ounces of gold annually, and its stock has a market capitalization exceeding $77 billion. Gold miners haven't been the most prominent investment theme of 2025, but Newmont's stock is up 91% year-to-date (YTD), including a 32% run in the last three months alone. The company's Q2 2025 earnings release saw EPS beat expectations by more than 27%, and its $5.32 billion in revenue easily beat the anticipated $4.93 billion. However, a trio of red flags has now appeared on the daily chart, and investors would be wise to take heed.
The first is a bearish wedge on the daily price action, characterized by higher lows but stagnant highs. The price action is confirmed on two other reliable technical signals: a bearish MACD cross and an Overbought signal on the RSI as it ticks above 70. The stock is above $70 for the first time since March 2022, but the history of NEM shares has been marked by massive volatility. If the stock has a pullback here, it might be more than a slight correction.
Shopify Inc.
Shopify (NASDAQ:SHOP) is one of Canada's most prominent public companies, with a market capitalization of $182 billion and annual sales of $10 billion. SHOP shares had been trading in a tight range following the post-tariff rally, but a strong Q2 earnings release resulted in a single-day gain of nearly 20%, finally breaking the stock above the resistance level that had been in place since early May. However, despite the earnings beat and numerous price target increases from analysts covering the stock, the price declined for eight of the subsequent 10 sessions, reverting to the previous trading range.
If the MACD is any indication, the stock may have further to fall before reaching its bottom. A bearish crossover on the MACD immediately followed the post-earnings bump as momentum faded and volume dried up. The stock has become increasingly overvalued, now sporting a P/E ratio above 78, and investors may be taking profits following the earnings blowout. The stock still needs to drop another $10 to find the previous support level, so the downward pressure could continue from here.
Aurora Innovation Inc.
Aurora Innovation (NASDAQ:AUR) has had a rocky 2025 so far, and is actually down 5% YTD. The company develops self-driving technology for autonomous vehicles, which is still in its Wild West stages. The company, with a $11 billion market capitalization, has only $68 million in annual sales and lost approximately $700 million in total last year. It's likely going to take time for Aurora to turn a profit (if ever), and its stock has been very volatile as a result.
The stock briefly topped $10 in February before experiencing a sharp pullback, and then $8 in May, followed by another sharp decline. A bearish MACD cross preceded the previous decline, and that's just what appeared on the chart again last week. The share price has been stuck in a rising wedge pattern since the start of July, but this bearish MACD signal should have investors watching the support level at the bottom of the wedge. If this level gives way, another rapid decline could follow.
Editorial content from our expert contributors is intended to be information for the general public and not individualized investment advice. Editors/contributors are presenting their individual opinions and strategies, which are neither expressly nor impliedly approved or endorsed by Benzinga.
Photo: Shutterstock
