How to Screen for Oversold Stocks Using RSI

Screening Concepts · July 2026

"Oversold" is one of the most common terms in technical trading, and one of the most commonly misunderstood. It doesn't mean a stock is cheap, and it doesn't mean it's about to bounce. It means a specific momentum indicator has crossed a specific threshold — nothing more, nothing less. Here's what that indicator actually measures, and how to screen for it.

What RSI actually measures

The Relative Strength Index (RSI) is a momentum oscillator that compares the size of recent gains to the size of recent losses over a set period — almost always 14 trading days by default. It's expressed as a single number from 0 to 100.

The math isn't complicated in spirit: if a stock has been going up more, and more sharply, than it's been going down, RSI sits high. If it's been falling more than it's been rising, RSI sits low. RSI doesn't look at price level, market cap, or valuation at all — only the recent pattern of gains versus losses.

What "oversold" actually means

By convention, an RSI reading below 30 is called "oversold," and a reading above 70 is called "overbought." These thresholds are a convention, not a law of markets — some traders use 20/80 for a stricter definition, especially in volatile stocks that can sit at extremes for a while.

The important caveat: oversold means "has fallen sharply and consistently enough to hit this threshold," not "is undervalued" or "is due for a bounce." A stock in a genuine, sustained downtrend can stay oversold for a long time. RSI is a measure of recent momentum, not a prediction of what happens next.

How to screen for it

Traditional screeners require you to know the exact filter name and syntax for RSI, then correctly configure period length and threshold. With OmniScreener, you just describe it:

• "stocks with RSI under 30"
• "stocks with RSI under 40 and market cap over $10B"
• "large-cap tech stocks with oversold RSI"

Each of these runs a real screen against current data and returns matching stocks with their actual RSI values attached, so you can see exactly how oversold each one is rather than just a yes/no match.

Using RSI as one input, not the whole picture

RSI on its own tells you about recent momentum — it says nothing about why a stock is falling, whether the business itself is sound, or what its valuation looks like. Combining an RSI screen with other criteria (sector, market cap, a valuation metric like P/E) tends to produce a more useful starting list than RSI alone, since it filters out situations where a stock is oversold for a very good, ongoing reason.

This article is for educational purposes only and is not financial, investment, or trading advice. Nothing here is a recommendation to buy, sell, or hold any security. Always do your own research and consult a licensed financial advisor before making investment decisions.