Investing sage, Warren Buffett, has counselled to be wary when others are avid and to seize opportunities when others are hesitant. One useful metric in gauging stock sentiment is the Relative Strength Index (RSI), which measures momentum from zero to 100. When the RSI falls below 30, a stock is deemed oversold.
On Wednesday, Dropbox Inc shares (Symbol: DBX) slipped into oversold territory, registering an RSI of 29.8, dipping as low as $24.185 per share. To provide context, the S&P 500 ETF (SPY) currently boasts an RSI of 62.6. A bullish investor may view DBX’s RSI of 29.8 as a signal that the recent spate of selling may be nearing its end, prompting a search for entry points on the buying side. The chart below illustrates DBX’s one-year performance:
As depicted in the graph, DBX’s 52-week low stands at $19.545 per share, contrasting with its $33.43 high, with the recent trade closing in at $24.36.
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The opinions expressed here are solely those of the writer and do not necessarily mirror the views of Nasdaq, Inc.
