Gartner’s RSI Just Sank to 11: That’s a Setup You Can’t Ignore

Key Points

• Gartner stock has fallen 60% since February, pushing its RSI to 11.
• There are signs that a low, albeit temporary, is in, and a short squeeze could trigger a sharp bounce. 
• Fresh analyst ratings and price targets suggest up to 90% upside from here.

Shares of Gartner Inc. NYSE: IT are trading just over $240, down from $340 barely two weeks ago. The stock had already been trending lower since February, but few could have predicted the sheer scale of the collapse over the past fortnight. Last week’s Q2 earnings release sparked a single-session drop of 30%, adding to a selloff that has now taken shares 60% below their February peak and back to price levels not seen since 2021. 

On the surface, it looks like a textbook example of a stock in free fall, the kind that most investors instinctively avoid. But a rare setup forming here could reward those willing to take a contrarian approach.

RSI Hits a Historic Low

The selling pressure was so intense that Gartner’s Relative Strength Index (RSI) collapsed to 9 earlier this week, the lowest reading in the company’s 32-year history. For context, RSI is a popular momentum indicator ranging from 0 to 100.

Readings above 70 suggest a stock is overbought, while those below 30 mean it’s extremely oversold. It is rare to have it drop under 20, but seeing it fall into the single digits is almost unheard of.

An RSI this low is the market equivalent of stretching an elastic band to its limit; it wants to snap back, and often does, violently. It’s not a guarantee of an immediate turnaround, but it’s one of the more reliable signals of a near-term bounce.

For short-term traders, it’s exactly the kind of setup that can produce outsized gains in a compressed timeframe.

Early Signs of Buying

There are signs that bargain hunters and short-covering traders are starting to step in. Wednesday’s 5.8% gain pushed RSI back above 20, but it remains firmly in oversold territory. 

If shares can climb above $250, the price they opened after last week’s earnings gap, it could open the door to a potential short squeeze. This situation occurs when traders who bet against buying the stock or are forced to close their positions are compelled to do so, which can fuel a rally and significantly speed up gains.

Such a squeeze in a stock as heavily oversold as Gartner could be sharp.

Looking Past the Panic

While the Q2 numbers may have disappointed guidance-watchers, they weren’t outright misses. Gartner topped Wall Street’s expectations for revenue and earnings in the quarter. The damage was done by weaker-than-expected full-year guidance, which spooked investors and gave bears the narrative they needed to pile in.

However, this ignores some critical positives. The company’s average contract value grew 5% year over year. Management reaffirmed its commitment to the share repurchase program, typically a bullish signal that leadership believes the stock is undervalued.

Gartner is actively pursuing AI initiatives as a growth driver, positioning itself to benefit from one of the strongest secular trends in the market.

Notably, major analysts have not abandoned their bullish outlook. Barclays reiterated its Buy rating following the post-earnings plunge, with a $320 price target that wasn’t even the highest. Goldman Sachs went further, maintaining its bullish stance and setting a $457 price target, which points to nearly 90% potential upside.

The Case for Getting Involved

The near-term trade here is straightforward: with an RSI this low, the downside risk over the coming sessions may be limited, while upside potential could be significant if sentiment shifts. The first test is $250. A clean break above this level could trigger the kind of rapid short covering that sends shares surging.

For longer-term investors, the decision is more nuanced. Gartner’s guidance cut reflects real challenges, and it may take time for confidence to rebuild. But if you believe the worst-case scenario has already been priced in, and the extreme selling has created a valuation disconnect, this could be a rare opportunity to start building a position at a steep discount.