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 HC2 Holdings Inc ( HCHC) entered into oversold territory, hitting an RSI reading of 27.7, after changing hands as low as $4.399 per share. By comparison, the current RSI reading of the S&P 500 ETF (SPY) is 53.2. A bullish investor could look at HCHC's 27.7 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 HCHC shares: Looking at the chart above, HCHC's low point in its 52 week range is $3.80 per share, with $7.27 as the 52 week high point — that compares with a last trade of $4.44. According to the ETF Finder at ETF Channel, HCHC makes up 325.82% of the SPDR Russell 2000 ETF ( TWOK) which is trading higher by about 0.1% on the day Friday.
TheStreet’s Fundamentals of Investing Course will teach you the keys to making the right decisions in any market.
TheStreet’s Personal Finance Essentials Course will teach you money management basics and investing strategies to help you avoid major financial pitfalls.
TheStreet Courses offers dedicated classes designed to improve your investing skills, stock market knowledge and money management capabilities.
More from Stocks
Dow Ends Lower in Narrow Trading Friday; Markets Shrug Off Global Tensions
Stocks retreat Friday over disappointment over Broadcom's revenue warning and uncertainty over trade talks and interest rates.
Jim Cramer: A 'Hard Left' Democratic President Would Be a 'Disaster' for Stocks
That's one of the biggest macro risks he sees for Wall Street right now.