SoFi Can Top Stunning All-Time High Surge With S&P 500 Update
The financial services firm just reached its highest-ever close and it can go higher.
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Shares of SoFi Technologies SOFI jumped 4.5% on Monday, reaching an all-time closing high of $26.25.
Why is SoFi one of the hottest stocks in the market? You can’t fight momentum, and that’s a defining characteristic of the current market.
This is especially true when it comes to high-beta tech names like SoFi. Robinhood Markets HOOD, which boasts a 415% gain over the past 12 months, and Reddit RDDT, which has gained 277% in the past 12 months, are examples of this phenomenon.
75% Gain in Just Over 2 Months
Since we recommended SoFi on June 13, this stock has climbed a stunning 75%. Over the past 12 months, SoFi has gained 241%.
Two months ago, we set $25 as our price target for SoFi. That figure was exceeded on Monday, as the stock closed at an all-time high.
SoFi’s bullish trend has carried it well above its 50-day (blue) and 200-day (red) moving averages. The biggest complaint I’m hearing from traders is that the stock is overbought.
Is SoFi Overbought?
According to the stock’s relative strength index (RSI) indicator, SoFi is overbought (green arrow). Any RSI reading above 70 is an overbought indication, and SoFi’s RSI stands at 71.2 (green arrow).
However, that overbought reading shouldn’t deter investors from buying the stock. The bulk of SoFi’s recent gains occurred while the stock was in an overbought condition, as seen on the bottom right of this chart (shaded yellow). The same is true of many of this year’s hottest names.
Despite SoFi’s eye-popping gains, it’s very possible that the San Francisco-based digital financial company will continue its rise. There’s been speculation that the company could be added to the S&P 500 index.
Thanks to the stock’s recent rally, which has caused shares to triple in price since the April 7 open, SoFi now has a market capitalization of over $31 billion. The minimum requirement for a stock to be added to the S&P 500 is $22.7 billion.
If SoFi is added to the S&P 500, all ETFs and index funds that are designed to mirror the large cap index would be forced to buy shares of the stock.
Powell Provides Fuel for the Fire
Fed Chairman Powell’s dovish remarks last week at Jackson Hole have only added fuel to the fire. Powell indicated that he was open to lowering interest rates if the economy slows down. As of Monday’s close, the odds of a rate cut at the Fed’s September 17 meeting stood at 83%.
At the time of publication, Ponsi was long SOFI, HOOD and RDDT.
