Warren Buffet, one of the most well known American investors, is advising for investors to be careful around greedy individuals and be greedy when others aren't.
One way we can try to measure the level of fear in a given stock is through a technical analysis indicator called the Relative Strength Index, or RSI, which measures momentum on a scale of zero to 100. A stock is considered to be oversold if the RSI reading falls below 30.
In trading recently, shares of CarGurus Inc entered into oversold territory, hitting an RSI reading of 28.9, after changing hands as low as $35.07 per share. By comparison, the current RSI reading of the S&P 500 ETF is 46.1.
A bullish investor could look at CARG's 28.9 RSI reading today 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.
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