Junior Gold Miners Getting Very Oversold

In trading on Tuesday, shares of the Junior Gold Miners ETF (NYSE:GDXJ) entered into oversold territory, changing hands as low as $30.885 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 Junior Gold Miners, the RSI reading has hit 28.6 — by comparison, the RSI reading for the S&P 500 is currently 53.3.

A bullish investor could look at GDXJ's 28.6 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), GDXJ's low point in its 52 week range is $30.461 per share, with $43.89 as the 52 week high point — that compares with a last trade of $31.09. Junior Gold Miners shares are currently trading off about 6.8% on the day.