In trading on Monday, shares of the First Trust AAA CMBS ETF (Symbol: CAAA) entered into oversold territory, changing hands as low as $19.94 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 First Trust AAA CMBS, the RSI reading has hit 28.0 — by comparison, the RSI reading for the S&P 500 is currently 55.0. A bullish investor could look at CAAA's 28.0 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.
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