First Trust Morningstar Dividend Leaders Index Fund Getting Very Oversold

In trading on Tuesday, shares of the First Trust Morningstar Dividend Leaders Index Fund ETF (Symbol: FDL) entered into oversold territory, changing hands as low as $33.21 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 Morningstar Dividend Leaders Index Fund, the RSI reading has hit 29.96 by comparison, the RSI reading for the S&P 500 is currently 59.2. A bullish investor could look at FDL's 29.96 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.