In trading on Tuesday, shares of the Financial Select Sector SPDR Fund ETF (Symbol: XLF) entered into oversold territory, changing hands as low as $20.02 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 Financial Select Sector SPDR Fund, the RSI reading has hit 29.6 - by comparison, the RSI reading for the S&P 500 is currently 36.2. A bullish investor could look at XLF's 29.6 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), XLF's low point in its 52 week range is $18.52 per share, with $25.62 as the 52 week high point - that compares with a last trade of $20.28. Financial Select Sector SPDR Fund shares are currently trading off about 0.5% on the day.