In trading on Friday, shares of the Vanguard Information Technology ETF (Symbol: VGT) entered into oversold territory, changing hands as low as $158.55 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 Vanguard Information Technology, the RSI reading has hit 28.5 - by comparison, the RSI reading for the S&P 500 is currently 22.0. A bullish investor could look at VGT's 28.5 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), VGT's low point in its 52 week range is $157.96 per share, with $204.44 as the 52 week high point - that compares with a last trade of $158.98. Vanguard Information Technology shares are currently trading off about 3.3% 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.