Legendary investor Warren Buffett advises to be fearful when others are greedy, and be greedy when others are fearful. One way we can try to measure the level of fear in a given stock is through a technical analysis indicator called the Relative Strength Index, or RSI, which measures momentum on a scale of zero to 100. A stock is considered to be oversold if the RSI reading falls below 30.
In trading on Tuesday, shares of Intrepid Potash Inc (IPI) entered into oversold territory, hitting an RSI reading of 16.7, after changing hands as low as $12.70 per share. By comparison, the current RSI reading of the S&P 500 ETF (SPY) is 60.6. A bullish investor could look at IPI's 16.7 RSI reading today 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. The chart below shows the one year performance of IPI shares:
Looking at the chart above, IPI's low point in its 52 week range is $12.70 per share, with $24.70 as the 52 week high point — that compares with a last trade of $13.88.
According to the ETF Finder at ETF Channel, IPI makes up 3.70% of the Fertilizers/Potash ETF (SOIL) which is trading lower by about 9.6% on the day Tuesday.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV