In trading on Wednesday, shares of the First Trust Alternative Absolute Return Strategy ETF (Symbol: FAAR) entered into oversold territory, changing hands as low as $31.11 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 Alternative Absolute Return Strategy, the RSI reading has hit 29.4 — by comparison, the RSI reading for the S&P 500 is currently 54.5.
A bullish investor could look at FAAR’s 29.4 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), FAAR’s low point in its 52 week range is $26.73 per share, with $35.805 as the 52 week high point — that compares with a last trade of $31.26. First Trust Alternative Absolute Return Strategy shares are currently trading off about 0.7% on the day.
