In trading on Thursday, shares of the The Energy Select Sector SPDR Fund ETF (Symbol: XLE) entered into oversold territory, changing hands as low as $61.25 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 The Energy Select Sector SPDR Fund, the RSI reading has hit 29.9 — by comparison, the RSI reading for the S&P 500 is currently 39.2. A bullish investor could look at XLE's 29.9 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), XLE's low point in its 52 week range is $53.36 per share, with $78.36 as the 52 week high point — that compares with a last trade of $61.62. The Energy Select Sector SPDR Fund shares are currently trading off about 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.