If you're a momentum trader in the materials sector, you might want to pump the brakes on two stocks that have been running a bit too hot lately. As of January 7, 2026, a couple of names are flashing warning signs that suggest their recent rallies could be running out of steam.
The culprit here is the Relative Strength Index, or RSI, a momentum indicator that compares how strong a stock performs on up days versus down days. Think of it as a fever thermometer for stocks. When the RSI climbs above 70, conventional wisdom says the stock is overbought and might be due for a breather. It doesn't guarantee a crash, but it suggests the easy money may have already been made.
Here are the two materials stocks that momentum-focused investors should be watching carefully right now.
Southern Copper Corp (SCCO)
Southern Copper has been on a tear, gaining roughly 14% over the past month. The stock closed at $160.08 on Tuesday after climbing 3.7%, approaching its 52-week high of $161.59. That's the good news.
The less-good news? The stock's RSI currently sits at 71.4, firmly in overbought territory. Adding to the caution, Itau BBA analyst Daniel Sasson downgraded Southern Copper from Market Perform to Underperform on December 23, slapping a $126 price target on it. That's a meaningful discount to current levels.
Interestingly, the stock scores a robust 92.69 on momentum metrics, but only a 22.95 on value. That divergence tells you everything: this is a momentum play, not a bargain hunt.
Freeport-McMoRan Inc (FCX)
Freeport-McMoRan is showing even hotter momentum signals, with an RSI of 75.3. The copper giant has surged approximately 25% over the past month, with shares rising 3.2% to close at $56.15 on Tuesday. That puts it tantalizingly close to its 52-week high of $57.12.
Unlike Southern Copper, Freeport has some analyst support in its corner. Wells Fargo analyst Timna Tanners maintained an Overweight rating on December 23 and actually raised her price target from $47 to $55. Of course, the stock has already blown past that target.
The question for investors is whether these momentum darlings can keep defying gravity, or if the overbought readings will finally matter. Sometimes stocks stay overbought longer than seems reasonable, especially when fundamentals are strong. But when the RSI flashes red this bright, it's usually smart to at least acknowledge the risk.
