In trading on Tuesday, shares of Arabian American Development Co. (NYSE:ARSD) entered into overbought territory, changing hands as high as $9.47 per share. We define overbought 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 overbought if the RSI reading rises above 70.
In the case of Arabian American Development Co., the RSI reading has hit 73.4 — by comparison, the universe of energy stocks covered by Energy Stock Channel currently has an average RSI of 58.0, and the RSI of Henry Hub Natural Gas is presently 38.7.
Investors could look at ARSD's 73.4 reading as a sign that the recent heavy buying is peaking which could mean shares are due for a pullback.
Looking at a chart of one year performance (below), ARSD's low point in its 52 week range is $3.16 per share, with $10.09 as the 52 week high point — that compares with a last trade of $9.40. Arabian American Development Co. shares are currently trading up about 5.2% on the day.
ARSD operates in the Oil & Gas Refining & Marketing sector, among companies like Murphy Oil Corp (NYSE:MUR) which is up about 3.4% today, and Marathon Petroleum Corp. (NYSE:MPC) trading up by about 1.9%. Below is a three month price history chart comparing the stock performance of ARSD, versus MUR and MPC.
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