LLegendary investor Warren Buffett advises to be afraid when others are greedy, and to be greedy when others are afraid. One way to try to gauge the fear level of a given stock is to use 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 as oversold if the RSI reading falls below 30.
In Friday’s trading, shares of Owens & Minor, Inc. (Symbol: IMO) entered oversold territory, hitting an RSI reading of 28.1, after changing hands as low as $35.29. per share. By comparison, the current RSI reading of the S&P 500 ETF (SPY) is 39.3. A bullish investor might take IMO’s RSI of 28.1 today as a sign that the recent strong selloffs are running out and starting to look for entry point opportunities on the buy side. The chart below shows the one-year performance of OMI shares:
Looking at the chart above, IMO’s low point in its 52-week range is $29.85 per share, with $49.16 as its 52-week high – compare with a last trade of 35, $49.
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