Shares of Petco Health and Wellness Company, Inc. (NASDAQ:WOOF) made a big move higher Monday, closing up by almost 18%.
But now shares are overbought, which means the rally may be over, at least temporarily.
See Also: Petco Options Traders Bet An Epic Short Squeeze Is In The Cards
The bottom part of the following chart is the Relative Strength Momentum Indicator. When the blue line crosses above the red horizontal line, it means that the shares have reached an extreme above what would be their typical trading range. This shows that the stock is overbought.
These conditions will draw sellers into the market. They could keep the shares from moving higher. They may even knock it lower.
