In trading on Friday, shares of the Materials Select Sector SPDR Fund ETF (Symbol: XLB) entered into oversold territory, changing hands as low as $48.59 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 Materials Select Sector SPDR Fund, the RSI reading has hit 27.9 - by comparison, the RSI reading for the S&P 500 is currently 22.0. A bullish investor could look at XLB's 27.9 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), XLB's low point in its 52 week range is $48.55 per share, with $64.17 as the 52 week high point - that compares with a last trade of $48.73. Materials Select Sector SPDR Fund shares are currently trading off about 1.6% on the day.