In trading on Wednesday, shares of the SPDR S&P Bank ETF (Symbol: KBE) entered into oversold territory, changing hands as low as $27.725 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 SPDR S&P Bank, the RSI reading has hit 29.5 - by comparison, the RSI reading for the S&P 500 is currently 40.3. A bullish investor could look at KBE'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), KBE's low point in its 52 week range is $27.59 per share, with $37.28 as the 52 week high point - that compares with a last trade of $27.67. SPDR S&P Bank shares are currently trading down about 2.6% 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.