Investors employing momentum-based strategies face increased caution with two leading technology stocks displaying elevated momentum readings as of early January 2026. Taiwan Semiconductor Manufacturing Company (TSMC) and Micron Technology (MU) have both registered Relative Strength Index (RSI) values above 70, a threshold commonly recognized to indicate overbought conditions in a stock's price action.
The RSI is a technical momentum indicator that compares a stock’s average gains on days with price increases to average losses on days with price decreases. This comparison provides a gauge for the stock’s prevailing strength and can signal whether short-term price movements might be due for a reversal or correction. With RSI levels exceeding 70, both TSMC and Micron currently present a profile that may caution momentum traders of a possible downturn in the near term.
Taiwan Semiconductor Manufacturing Company (NYSE: TSM)
TSMC, a worldwide leader in semiconductor fabrication, recently secured a critical one-year export license from the United States allowing continued import of U.S.-sourced chipmaking equipment into its China-based manufacturing facilities. This development, dated January 1, 2026, supports ongoing production capabilities in a strategically important region.
Over the five trading days leading up to January 6, 2026, TSMC’s stock price appreciated by approximately 7%, reaching close to its 52-week peak of $331.25. On Monday, January 6, shares closed at $322.25, reflecting a moderate daily gain of 0.8%. The RSI at 72.1 indicates that despite recent gains, the stock may be entering an overbought zone, suggesting potential for limited short-term upside without a corrective pullback.
According to the BZ Edge scoring system, TSMC holds a momentum score of 88.80, paired with a value score of 33.75. This disparity between high momentum and moderate value metrics may imply that while short-term trading strength is robust, valuation considerations remain more tempered.
Micron Technology Inc. (NASDAQ: MU)
Micron Technology, a major producer of memory chips and related semiconductor components, released its fiscal first-quarter financial results on December 17, 2025. The company achieved revenue of $13.64 billion, surpassing analyst expectations of $12.83 billion. Adjusted earnings per share were reported at $4.78, outperforming the estimated $3.95 per share.
Micron’s leadership highlighted the quarter as a period of record revenue and meaningful margin expansion both at the corporate level and across individual business units. CEO Sanjay Mehrotra emphasized the strong operational performance signaling company growth and profitability improvements.
The market reacted positively with Micron’s stock price increasing by around 26% over the prior month. Despite this upward momentum, on Monday, January 6, 2026, shares declined slightly by 1%, closing at $312.15. The stock's RSI at 71.1 mirrors that of TSMC, indicating a potential overbought status consistent with heightened short-term buying pressure.
Momentum Indicator Implications
RSI values above 70 often serve as caution flags within technical analysis frameworks. Such readings do not guarantee a reversal but suggest the current price weather may be fragile, particularly for trading strategies reliant on sustained upward momentum. Both TSMC and Micron’s elevated RSI levels imply that their recent gains could encounter resistance or consolidation in the near term.
Additional Metrics and Market Performance
- TSMC’s 52-week high sits at $331.25, while it closed near $322.25 on January 6, 2026.
- Micron’s 52-week trading peak is noted at $325.53, with the closing price at $312.15 noted on the same day.
- BZ Edge rankings demonstrate TSMC’s strong momentum juxtaposed with moderate value metrics and Micron showing active price trends with growing earnings and revenue.
Summary of Investor Considerations
Both stocks display clear signs of strong recent performance, supported by financial results and operational developments. However, the elevated RSI values highlight an overbought condition that may lead to short-term price corrections, especially for those relying on momentum-based trading frameworks.
Key Points
- TSMC’s U.S. export license renewal facilitates continued chipmaking operations in China, supporting business stability.
- Micron’s fiscal Q1 results exceeded consensus estimates on both revenue and adjusted earnings, underpinning its recent stock price gains.
- High RSI values for both TSM and MU indicate overbought market conditions, suggesting short-term momentum risk.
- Market price levels are close to 52-week highs, which can be areas of price resistance.
Risks and Uncertainties
- Elevated RSI readings could precede short-term pullbacks, posing risks for momentum-focused investors.
- Market prices approaching recent highs may encounter resistance, limiting near-term upside potential.
- Reliance on recent financial performance data does not preclude volatility arising from external factors affecting the semiconductor sector.
- Any changes in export license terms or geopolitical tensions could impact TSMC’s operational landscape.