In trading on Friday, shares of the First Trust Dorsey Wright Focus 5 ETF (Symbol: FV) entered into oversold territory, changing hands as low as $23.788 per share. We define oversold territory using the Relative Strength Index, or RSI, which is a technical analysis indicator used to measure momentum on a scale of zero to 100. A stock is considered to be oversold if the RSI reading falls below 30.
In the case of First Trust Dorsey Wright Focus 5, the RSI reading has hit 27.1 - by comparison, the RSI reading for the S&P 500 is currently 22.0. A bullish investor could look at FV's 27.1 reading as a sign that the recent heavy selling is in the process of exhausting itself, and begin to look for entry point opportunities on the buy side.
Looking at a chart of one year performance (below), FV's low point in its 52 week range is $23.76 per share, with $31.80 as the 52 week high point - that compares with a last trade of $23.82. First Trust Dorsey Wright Focus 5 shares are currently trading off about 3.5% on the day.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.