In trading on Wednesday, shares of the iShares Dow Jones U.S. Financial Services Index Fund ETF (AMEX: IYG) entered into oversold territory, changing hands as low as $48.97 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 iShares Dow Jones U.S. Financial Services Index Fund, the RSI reading has hit 29.3 — by comparison, the RSI reading for the SP 500 is currently 33.3.
A bullish investor could look at IYG’s 29.3 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), IYG’s low point in its 52 week range is $37.90 per share, with $58.31 as the 52 week high point — that compares with a last trade of $49.00. iShares Dow Jones U.S. Financial Services Index Fund shares are currently trading down about 1.3% on the day.
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