In trading on Tuesday, shares of the Capital Group Municipal High-Income ETF (Symbol: CGHM) entered into oversold territory, changing hands as low as $25.0309 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 Capital Group Municipal High-Income, the RSI reading has hit 27.2 — by comparison, the RSI reading for the S&P 500 is currently 49.1.
A bullish investor could look at CGHM’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), CGHM’s low point in its 52 week range is $24.5201 per share, with $30 as the 52 week high point — that compares with a last trade of $25.11. Capital Group Municipal High-Income shares are currently trading off about 0.7% on the day.
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