In trading on Thursday, shares of the Proshares UltraShort Financials ETF (SKF) entered into oversold territory, changing hands as low as $18.484 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 Proshares UltraShort Financials, the RSI reading has hit 28.2 — by comparison, the RSI reading for the S&P 500 is currently 70.5.
A bullish investor could look at SKF's 28.2 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), SKF's low point in its 52 week range is $18.484 per share, with $38.10 as the 52 week high point — that compares with a last trade of $18.50. Proshares UltraShort Financials shares are currently trading off about 2.7% on the day.