Utilities Select Sector SPDR Fund Getting Very Oversold

In trading on Wednesday, shares of the Utilities Select Sector SPDR Fund ETF (Symbol: XLU) entered into oversold territory, changing hands as low as $75.54 per share. We define oversold territory using the Relative Strength Index, or RSI, which is a technical analysis indicator used to measure momentum on a scale of zero to 100. A stock is considered to be oversold if the RSI reading falls below 30.

In the case of Utilities Select Sector SPDR Fund, the RSI reading has hit 29.9 — by comparison, the RSI reading for the S&P 500 is currently 49.5. A bullish investor could look at XLU's 29.9 reading as a sign that the recent heavy selling is in the process of exhausting itself, and begin to look for entry point opportunities on the buy side.

Looking at a chart of one year performance (below), XLU's low point in its 52 week range is $59.14 per share, with $83.41 as the 52 week high point — that compares with a last trade of $75.42. Utilities Select Sector SPDR Fund shares are currently trading down about 1.4% on the day.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.