USO Crosses Critical Technical Indicator

In trading on Thursday, shares of the USO ETF (Symbol: USO) entered into oversold territory, changing hands as low as $58.04 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 USO, the RSI reading has hit 28.0 — by comparison, the RSI reading for the S&P 500 is currently 40.8. A bullish investor could look at USO's 28.0 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), USO's low point in its 52 week range is $57.94 per share, with $92.20 as the 52 week high point — that compares with a last trade of $58.35. USO shares are currently trading off about 3% on the day.

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