In trading on Monday, shares of the Semiconductor ETF (Symbol: SMH) entered into oversold territory, changing hands as low as $100.58 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 Semiconductor, the RSI reading has hit 28.6 — by comparison, the RSI reading for the S&P 500 is currently 41.7. A bullish investor could look at SMH's 28.6 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), SMH's low point in its 52 week range is $80.71 per share, with $120.71 as the 52 week high point — that compares with a last trade of $101.35. Semiconductor shares are currently trading down about 4% on the day.