Apr 10 2014, 3:27pm CDT | by Forbes
In trading on Thursday, shares of Dominion Diamond Corp (NYSE: DDC) entered into oversold territory, changing hands as low as $13.11 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 Dominion Diamond Corp, the RSI reading has hit 27.2 — by comparison, the universe of metals and mining stocks covered by Metals Channel currently has an average RSI of 48.5, the RSI of Spot Gold is at 51.5, and the RSI of Spot Silver is presently 39.9.
A bullish investor could look at DDC’s 27.2 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), DDC’s low point in its 52 week range is $11.94 per share, with $16.78 as the 52 week high point — that compares with a last trade of $13.15. Dominion Diamond Corp shares are currently trading down about 2.4% on the day.
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