In trading on Monday, shares of the iShares Russell 2000 ETF (Symbol: IWM) entered into oversold territory, changing hands as low as $107.88 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 Russell 2000, the RSI reading has hit 29.5 - by comparison, the RSI reading for the S&P 500 is currently 33.3. A bullish investor could look at IWM's 29.5 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), IWM's low point in its 52 week range is $103.54 per share, with $129.10 as the 52 week high point - that compares with a last trade of $108.39. iShares Russell 2000 shares are currently trading down about 2.8% on the day.