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 Friday, shares of China Automotive Systems Inc ( CAAS - Get Report) entered into oversold territory, hitting an RSI reading of 29.6, after changing hands as low as $6.84 per share. By comparison, the current RSI reading of the S&P 500 ETF (SPY) is 54.7. A bullish investor could look at CAAS's 29.6 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 CAAS shares: Looking at the chart above, CAAS's low point in its 52 week range is $6.04 per share, with $10.86 as the 52 week high point — that compares with a last trade of $6.86.
More from Stocks
Predictable Fed Cut: Cramer's 'Mad Money' Recap (Wednesday 9/18/19)
The uber-bulls were disappointed, says Jim Cramer. Jay Powell is not a fire-breathing Fed chief, and investors should appreciate that.
Snap CEO Discusses Trends in Company's Recent Turnaround
Evan Spiegel talked about Snap's stock volatility and the company's long-term vision at a Goldman Sachs conference on Wednesday.
Powell Leaves Bears Just Wishing, Hoping and Praying
This was the fourth major news event in the last 10 days that has barely moved the indices.