In trading on Wednesday, shares of the China Infrastructure ETF (CHXX) entered into oversold territory, changing hands as low as $14.83 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 China Infrastructure, the RSI reading has hit 29.1 — by comparison, the RSI reading for the S&P 500 is currently 44.9.
A bullish investor could look at CHXX's 29.1 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), CHXX's low point in its 52 week range is $14.56 per share, with $20.65 as the 52 week high point — that compares with a last trade of $14.83. China Infrastructure shares are currently trading down about 3.3% on the day.