Legendary investor Warren Buffett often reminds us to be fearful when others are greedy and to be greedy when others are fearful. To gauge the fear level in a stock, investors can use a technical analysis tool called the Relative Strength Index (RSI). This indicator measures momentum on a scale from 0 to 100. Stock values below 30 indicate an oversold condition, suggesting a potential buying opportunity.
On Thursday, shares of Diageo plc (Symbol: DEO) entered oversold territory with an RSI of 29.8, trading as low as $118.41 per share. In contrast, the S&P 500 ETF (SPY) currently holds an RSI of 58.8. For bullish investors, DEO’s current RSI may indicate that the recent selling pressures could be easing, prompting a search for buying opportunities. The chart below illustrates the one-year performance of DEO shares:
Examining the chart, DEO’s 52-week low stands at $117.84 per share, with a high of $154.71, compared to its latest trade at $118.27.
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The views and opinions expressed herein are the author’s own and do not necessarily reflect those of Nasdaq, Inc.
