Buffett’s Wisdom: Analyzing Oversold Stocks with RSI
Legendary investor Warren Buffett reminds us to be fearful when others are greedy and to be greedy when others are fearful. One way to gauge fear in a stock is through the Relative Strength Index (RSI), a technical analysis tool that measures momentum on a scale from zero to 100. A reading below 30 indicates that a stock may be oversold.
Akamai Technologies Shows Signs of Exhaustion
On Friday, shares of Akamai Technologies Inc (Symbol: AKAM) found themselves in oversold territory with an RSI reading of 27.5, trading as low as $89.80 per share. In contrast, the current RSI of the S&P 500 ETF (SPY) stands at 68.9. This low RSI may suggest to bullish investors that the heavy selling of AKAM is nearing its end, presenting potential buying opportunities. Below is a snapshot of AKAM’s performance over the past year:
From the chart, it’s clear that the lowest point for AKAM in the past 52 weeks was $87.59, while the highest was $129.17. At the closing trade of $89.64, the stock is just above its low.
Discover 9 additional oversold stocks to consider »
Additional Resources:
- SPIB Options Chain
- Funds Holding Synchrony Financial
- APA Price Target
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
