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 Thursday, shares of Wet Seal, Inc. ( WTSL) entered into oversold territory, hitting an RSI reading of 29.2, after changing hands as low as $4.57 per share. By comparison, the current RSI reading of the S&P 500 ETF (SPY) is 58.1. A bullish investor could look at WTSL's 29.2 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 WTSL shares: Looking at the chart above, WTSL's low point in its 52 week range is $2.63 per share, with $5.20 as the 52 week high point — that compares with a last trade of $4.59.
More from Stocks
Cedar Fair Stockholders Enjoy Riding the 'Golden Cross'
Shares of the amusement park operator still look bullish. Here's how to trade it.
3 Earnings Reports Will Be Key for the Market Next Week
There is a good foundation for more positive action in the week ahead.
Stocks Finish Lower, Pulled Down by Boeing, Johnson & Johnson, Weak China Growth
Stocks declined as Boeing and Johnson & Johnson pulled shares down, while China posted its weakest quarterly economic growth rate in nearly three decades, returning investors' attention to the trade talks between Washington and Beijing.
Are Stock Investors Overreacting to China's GDP Lag? One Big Investor Thinks So
Stock investors should take a finer look at China's economy, UBS thinks.