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 Wednesday, shares of Applied Optoelectronics Inc ( AAOI - Get Report) entered into oversold territory, hitting an RSI reading of 27.9, after changing hands as low as $8.51 per share. By comparison, the current RSI reading of the S&P 500 ETF (SPY) is 38.6. A bullish investor could look at AAOI's 27.9 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 AAOI shares: Looking at the chart above, AAOI's low point in its 52 week range is $8.51 per share, with $28.01 as the 52 week high point — that compares with a last trade of $8.72.
More from Stocks
Shares of Tapestry, Parent of Coach, Slide After UBS Downgrade to Neutral
The $24 billion resale market for luxury items is emerging as a major threat to the earnings of luxury retailer Tapestry, owner of the Coach brand.
Stocks Slide on Trade Agreement Uncertainty as China Wants More Talks
Stocks are falling Monday after Chinese officials said they want to talk further about last week's tentative trade agreement between the world's two largest economies.
Boeing Shares in Focus After CEO Dennis Muilenburg Stripped of Chairman's Role
Boeing shares drifted lower Monday after the planemaker said it would strip CEO Dennis Muilenburg of his chairman role in order to allow his to focus entire on bringing the grounded 737 MAX aircraft back into service.
Markets on Rewind? Phase 1 Is a Movie Wall Street Has Seen Before
Uncertainty persists as the theme in markets, even after an overall positive trade development Monday and Friday.
CrowdStrike Drops on Bearish Citi Initiation Due to Valuation Concerns
Citi initiates coverage of the stock with a sell rating despite noting the digital security company is one of the fastest growing security companies in history.