In trading on Friday, shares of the iShares MSCI China ETF (Symbol: MCHI) entered into oversold territory, changing hands as low as $43.71 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 iShares MSCI China, the RSI reading has hit 26.0 - by comparison, the RSI reading for the S&P 500 is currently 40.5. A bullish investor could look at MCHI's 26.0 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), MCHI's low point in its 52 week range is $39.77 per share, with $64.58 as the 52 week high point - that compares with a last trade of $43.95. iShares MSCI China shares are currently trading off about 2.4% on the day.