In trading on Friday, shares of the First Trust Cloud Computing ETF (Symbol: SKYY) entered into oversold territory, changing hands as low as $46.16 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 Cloud Computing, the RSI reading has hit 29.3 - by comparison, the RSI reading for the S&P 500 is currently 22.0. A bullish investor could look at SKYY's 29.3 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), SKYY's low point in its 52 week range is $44.10 per share, with $57.071 as the 52 week high point - that compares with a last trade of $46.33. First Trust Cloud Computing shares are currently trading off about 3.5% on the day.