In trading on Friday, shares of the Lithium ETF (LIT) entered into oversold territory, changing hands as low as $11.3201 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 Lithium, the RSI reading has hit 26.7 — by comparison, the RSI reading for the S&P 500 is currently 38.4.
A bullish investor could look at LIT's 26.7 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), LIT's low point in its 52 week range is $11.3201 per share, with $16.35 as the 52 week high point — that compares with a last trade of $11.32. Lithium shares are currently trading off about 2.3% on the day.