With the market trading sideways since mid-May, finding opportunities hasn’t been an easy task. But investors on the hunt for value can turn to oversold stocks to identify potential entry points. One popular gauge for determining that is the relative strength index (RSI), a momentum indicator that suggests when equities are overvalued, undervalued, or fairly valued.
According to the RSI, stocks are assigned a score from zero to 100. Readings over 70 are considered overbought and potentially due for a bearish price reversal. Conversely, stocks with readings under 30 are considered oversold and could be due for a bullish price reversal.
