In trading on Tuesday, shares of the XLP ETF (Symbol: XLP) entered into oversold territory, changing hands as low as $68.16 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 XLP, the RSI reading has hit 27.2 — by comparison, the RSI reading for the S&P 500 is currently 25.3. A bullish investor could look at XLP's 27.2 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), XLP's low point in its 52 week range is $68.14 per share, with $81.34 as the 52 week high point — that compares with a last trade of $68.15. XLP shares are currently trading down about 1.6% on the day.
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