By Hana Yamamoto
In the communication services sector, a subset of stocks is currently showing momentum characteristics that warrant a closer look from investors who prioritize technical indicators in their decision-making frameworks. The Relative Strength Index (RSI), a momentum oscillator comparing the magnitude of recent gains to recent losses, serves as a tool to gauge whether a stock might be overextended and prone to a pullback in the near term. Typically, an RSI exceeding 70 suggests overbought conditions.
As of January 12, 2026, three stocks have registered RSI values above this crucial threshold, flagging potential short-term price corrections despite recent gains. The stocks under review include Scholastic Corporation (NASDAQ:SCHL), Iridium Communications Inc. (NASDAQ:IRDM), and Sphere Entertainment Co. (NYSE:SPHR).
Scholastic Corporation (NASDAQ:SCHL)
Scholastic has been notable in recent weeks due in part to executive leadership developments. On January 5, Jeffrey Mathews was appointed president of Scholastic Education, supplementing his existing responsibilities as chief growth officer. This strategic internal shift comes amid a 15% stock price increase over the past month, indicating considerable investor interest and momentum.
At the close of the most recent trading week, Scholastic shares advanced by 2.7%, settling at $33.44. This price is near the company’s 52-week high of $33.46, underscoring the stock’s recent strength. However, the stock’s RSI stands at 74.5, signaling an overbought technical reading.
According to Edge Stock Ratings, Scholastic has a momentum score of 92.14, highlighting recent strong price action, but the value metric is relatively moderate at 49.04. Such a combination suggests that while price strength is apparent, the valuation does not strongly favor a continued surge without retracement.
Iridium Communications Inc. (NASDAQ:IRDM)
Iridium Communications has also drawn attention with news from late last year when, on December 4, Louis Alterman joined its board of directors. This governance update coincided with an 8% rise in the stock over a five-day span recently recorded, demonstrating positive investor sentiment.
Price-wise, the stock closed at $19.34 on the last trading day reported, a 4.3% increase on the day, yet significantly below its 52-week peak of $34.45. In terms of technical momentum, Iridium’s RSI is positioned at 70.1, just above the overbought boundary recognized by many traders.
Sphere Entertainment Co. (NYSE:SPHR)
Sphere Entertainment experienced notable analyst attention early in January. On January 9, Seaport Global upgraded the company from Neutral to a Buy rating, alongside issuing a price target of $106. This upgrade was accompanied by a 6% stock price increase over the previous month.
The shares have shown strong upward movement, closing most recently at $95.26, gaining 4.3% on the day. The stock remains near its 52-week high of $97.20. Its RSI stands at 70.2, suggesting that the stock, while appreciated in recent sessions, is approaching technical overextension.
Technical Momentum Insights and Considerations
The use of RSI as an analytical tool provides investors a window into potential upcoming price corrections when a stock is considered overbought. In the cases discussed, all three companies exceed the RSI overbought threshold, which may indicate a limited scope for continued upside in the immediate term without some form of price consolidation.
The momentum ticks up for these securities have coincided with corporate governance changes or analyst rating shifts, which may have contributed to sudden price advances. However, while fundamental developments can support long-term growth, the current elevated RSI readings suggest traders should monitor these positions closely for signs of momentum waning.
Conclusion
Investors relying on momentum indicators to inform trading decisions are advised to exercise caution with Scholastic, Iridium Communications, and Sphere Entertainment at present. Though each exhibits strong recent gains and positive catalysts, their technical indicators suggest short-term risk of a price correction given their overbought RSI levels.
Continued monitoring of these stocks’ price movements and momentum metrics, alongside fundamental updates, will be essential in managing exposure and optimizing trading timing within this communication services sector subset.
Key Points
- Three communication services stocks—Scholastic, Iridium Communications, and Sphere Entertainment—show RSI levels above 70, signaling potential short-term overbought conditions.
- Recent price advances are linked with leadership changes, board appointments, and analyst upgrades, contributing to increased investor interest.
- Scholastic’s momentum score is notably high, although its value score suggests moderate valuation appeal.
- Technical caution is advised given the proximity of current share prices to 52-week highs coupled with elevated RSI readings.
Risks and Uncertainties
- Elevated RSI metrics imply heightened risk of a near-term price pullback or consolidation.
- Market reactions to executive and board changes may be transient, potentially leading to short-term volatility.
- Analyst upgrades may not guarantee sustained price increases amidst changing market dynamics.
- Close attention is necessary as the valuation and momentum dynamics evolve, which could impact investor returns.