Renowned investor Warren Buffett advises investors to be cautious when others are overly optimistic, and to be confident when others are fearful. One way to gauge the level of fear in a particular stock is through a technical analysis tool called the Relative Strength Index (RSI), which measures momentum on a scale of zero to 100. If the RSI reading falls below 30, it suggests that the stock is oversold.
On Tuesday, shares of Bausch Health Companies Inc (Symbol: BHC) entered into oversold territory, reaching an RSI reading of 25.0 after trading as low as $7.56 per share. In comparison, the current RSI reading of the S&P 500 ETF (SPY) is 43.1. A bullish investor might interpret BHC’s RSI reading of 25.0 as a sign that the recent heavy selling pressure is starting to subside, and may consider looking for opportunities to buy. The chart below illustrates the one-year performance of BHC shares:
From the above chart, it can be seen that the lowest point in BHC’s 52-week range is $5.5703 per share, while the highest point is $10.23 per share. Currently, the stock is trading at $7.58 per share.
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