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 Thursday’s trading, shares of Mercury Systems Inc (Symbol: MRCY) entered oversold territory, hitting an RSI reading of 29.8, after changing hands as low as $58.30 per share. By comparison, the current RSI reading of the S&P 500 ETF (SPY) is 49.5. A bullish investor might take the MRCY’s RSI of 29.8 today as a sign that the recent selloff is running out of steam, and start looking for entry point opportunities on the buying side. The chart below shows the one-year performance of the MRCY stock:
Looking at the chart above, MRCY’s low point in its 52-week range is $44.44 per share, with $78.24 as its 52-week high – compare with a last trade of 58.54 $.
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