In trading on Monday, shares of the iShares MSCI Emerging Markets ETF (Symbol: EEM) entered into oversold territory, changing hands as low as $39.28 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 Emerging Markets, the RSI reading has hit 29.2 — by comparison, the RSI reading for the S&P 500 is currently 44.9. A bullish investor could look at EEM's 29.2 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), EEM's low point in its 52 week range is $37.575 per share, with $44.84 as the 52 week high point — that compares with a last trade of $39.40. iShares MSCI Emerging Markets shares are currently trading down about 1.1% on the day.