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 CapStar Financial Holdings Inc ( CSTR - Get Report) entered into oversold territory, hitting an RSI reading of 28.3, after changing hands as low as $19.52 per share. By comparison, the current RSI reading of the S&P 500 ETF (SPY) is 83.7. A bullish investor could look at CSTR's 28.3 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 CSTR shares: Looking at the chart above, CSTR's low point in its 52 week range is $16 per share, with $22.22 as the 52 week high point — that compares with a last trade of $19.49.
More from Stocks
Stocks Turn Mixed on Rate-Cut Hopes, Strong Microsoft Earnings
Stocks are mixed in late trading Friday as investors react to comments from Fed officials that could signal deeper rate cuts, plus robust earnings results from Microsoft.
Jim Cramer: When to Violate an Initial Price Basis
Curious about how Jim Cramer's Action Alerts PLUS charitable trust portfolio approaches stocks? Here's his advice to one club member on Cramer's exclusive members-only July conference call.
Schlumberger Had a Long Decline but That Does Not Make It a Buying Opportunity
We cannot rule out new lows for a move down in the weeks ahead.