10 Most Oversold Stocks In The S&P 500

December 10, 2019 12:10 pm
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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. (NYSE:VTR), 22.8 RSI.
  2. Public Service Enterprise Group Inc. (NYSE:PEG), 27.1 RSI.
  3. A. O. Smith Corp (NYSE:AOS), 29.4 RSI.
  4. Rollins, Inc. (NYSE:ROL), 30.9 RSI.
  5. Jacobs Engineering Group Inc (NYSE:JEC), 31.4 RSI.
  6. Dollar Tree, Inc. (NASDAQ:DLTR), 31.7 RSI.
  7. F5 Networks, Inc. (NASDAQ:FFIV), 33.2 RSI.
  8. Textron Inc. (NYSE:TXT), 33.4 RSI.
  9. H & R Block Inc (NYSE:HRB), 33.5 RSI.
  10. Marathon Petroleum Corp (NYSE: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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