10 Most Oversold Stocks In The S&P 500

Technical traders are always looking for signals that a stock could be due for a change in direction. Given that stocks rarely move in one direction for too long without periodic retracements, a stock that has endured heavy selling pressure and has become “oversold” may be a potential buying opportunity.

RSI Explained

One of the most popular metrics for determining whether a stock is overbought is relative strength index, or RSI. RSI is an oscillator that fluctuates from 0 to 100 based on the magnitude of recent price changes in a stock. RSI can be calculated on any number of different time periods, but the typical period is 14 days.

The formula for calculating RSI is RSI = 100 - [100/1+(average gain/average loss)]. However, all traders need to know is that the lower the RSI, the more oversold a stock is. The higher the RSI the more overbought a stock is considered to be. Typically, traders use 30 (oversold) and 70 (overbought) as potential buy or sell signals.

A stock with an RSI under 30 is a candidate for a technical bounce, at least in the short term.

See Also: 9 Most Overbought Stocks In The S&P 500

Oversold Stocks

The S&P 500 has been mostly flat in the past two weeks, but some stocks have taken big hits in that time. Here are the 10 S&P 500 stock with the lowest RSIs as of Tuesday morning, according to Finviz:

  1. Ventas, Inc. VTR, 22.8 RSI.
  2. Public Service Enterprise Group Inc. PEG, 27.1 RSI.
  3. A. O. Smith Corp AOS, 29.4 RSI.
  4. Rollins, Inc. ROL, 30.9 RSI.
  5. Jacobs Engineering Group Inc JEC, 31.4 RSI.
  6. Dollar Tree, Inc. DLTR, 31.7 RSI.
  7. F5 Networks, Inc. FFIV, 33.2 RSI.
  8. Textron Inc. TXT, 33.4 RSI.
  9. H & R Block Inc HRB, 33.5 RSI.
  10. Marathon Petroleum Corp MPC, 34.0 RSI.

Benzinga’s Take

RSI can be a useful momentum trading tool, but don’t rely on it for long-term investing. A stock’s RSI can drop from overbought territory to oversold territory in a matter of days, and it should only be used as a short-term trading indicator.

Do you agree with this take? Email feedback@benzinga.com with your thoughts.

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