Technical and Fundamental Analysis Simple: Charting the Markets in Your Language.

Relative Strength Index - RSI -

A technical momentum indicator that compares the magnitude of recent gains to recent losses in an attempt to determine overbought and oversold conditions of an asset.

The RSI ranges from 0 to 100. An asset is deemed to be overbought once the RSI approaches the 70 level, meaning that it may be getting overvalued and is a good candidate for a pullback. Likewise, if the RSI approaches 30, it is an indication that the asset may be getting oversold and therefore likely to become undervalued.

Overbought/Oversold

Wilder recommended using 70 and 30 and overbought and oversold levels respectively. Generally, if the RSI rises above 30 it is considered bullish for the underlying stock. Conversely, if the RSI falls below 70, it is a bearish signal. Some traders identify the long-term trend and then use extreme readings for entry points. If the long-term trend is bullish, then oversold readings could mark potential entry points.

Updated Sunday, Nov. 23, 2008, 11:17 AM ET.   Oversold stocks.

1. Alcoa, Inc. (AA)
2. Apple Inc. (AAPL)
3. Google Inc. (GOOG)
4. Citigroup, Inc. (C)
5. Intel Corporation (INTC)