Three Renewable Energy and Utilities Stocks Risk Sharp Pullback on Extreme Momentum Signals

When Overbought Conditions Signal Potential Downside Risk in January

Technical analysis suggests that several utilities and renewable energy stocks could plummet from current levels as momentum indicators flash warning signs heading into late January 2026. The Relative Strength Index (RSI), which measures the speed and scale of price changes, provides traders with critical insight into whether assets have extended too far too quickly. An RSI reading above 70 typically signals overbought conditions—a red flag that a correction may be imminent.

Ellomay Capital Ltd: Extreme Momentum at Risk

Ellomay Capital Ltd (NYSE: ELLO) presents the most aggressive technical setup among utilities stocks currently under scrutiny. The company reported Q3 earnings of $0.93 per share on December 30, marking a substantial improvement from $0.52 in the prior year period. Despite strong fundamentals, the stock’s 27% monthly advance and RSI of 75.5 suggest valuation has gotten ahead of itself. Shares closed Thursday at $28.40, not far below the 52-week peak of $28.49, leaving limited room for further gains before a pullback becomes likely.

Enlight Renewable Energy: JP Morgan Sounds the Alarm

Enlight Renewable Energy Ltd (NASDAQ: ENLT) received a downgrade from JP Morgan analyst Mark Strouse on December 8, shifting from Neutral to Underweight with a $35 price target—implying significant downside from current levels. Despite the bearish call, the stock continued its upward trajectory, gaining roughly 27% over the preceding month and reaching $51.50 at its 52-week high. An RSI reading of 71.9 confirms overbought conditions. Thursday’s close at $50.35, up 1.6% on the day, shows momentum persists even as technical measures warn of exhaustion. The Edge Stock Ratings system assigns a Momentum score of 97.50 against a Value score of just 12.37—a stark divergence indicating price strength disconnected from intrinsic value.

Hawaiian Electric Industries: Settlement Provides Context

Hawaiian Electric Industries Inc (NYSE: HE) agreed to a $47.75 million shareholder settlement related to the Maui wildfires on January 6, according to Reuters. The settlement news failed to dampen investor enthusiasm, as shares climbed approximately 11% over the past seven days to reach a 52-week high of $13.91. With an RSI of 71.1 and Thursday’s 2% gain closing shares at $13.66, the stock exhibits classic overbought technicals despite company-specific headwinds.

The Bottom Line

All three utilities and renewable energy stocks display RSI readings above 70, suggesting limited upside and elevated risk of significant pullback. Momentum-focused traders should monitor these positions closely, as sharp reversals typically follow extreme technical extremes.