Gildan Activewear Shares Enter Oversold Territory as RSI Falls Below 30

Legendary investor Warren Buffett has long advised investors to be fearful when others are greedy, and greedy when others are fearful. One way market participants attempt to gauge that shift in sentiment is through the Relative Strength Index, or RSI, a widely followed momentum indicator that measures price strength on a scale of 0 to 100. In general, a reading below 30 is viewed as oversold, while a reading above 70 is considered overbought.

In trading on Thursday, shares of Gildan Activewear Inc (GIL.CA) moved into oversold territory, with the stock registering an RSI reading of 28.9 after trading as low as $74.94 per share. By comparison, the current RSI reading of the S&P/TSX Composite Index is 57.0, indicating considerably firmer broader-market momentum than what has recently been seen in Gildan shares.

For technically oriented investors, an RSI below 30 can suggest that recent selling pressure may have become stretched in the near term. That said, oversold readings are not, by themselves, a signal that a stock has bottomed. In practice, many traders look for confirmation through stabilizing price action, improving volume patterns, or a rebound back above key technical levels before concluding that downside momentum has run its course.

The chart below shows the one-year performance of GIL.CA shares:

Viewed in the context of its broader trading range, Gildan Activewear shares have moved well off their 52-week high of $100.44, while remaining above the 52-week low of $52.765. The last trade of $75.75 places the stock in the lower half of that range, a setup that may draw attention from investors screening for technically weak names that could be nearing a potential inflection point.

It is also worth noting that RSI is a short-term momentum measure, not a fundamental valuation tool. Investors evaluating Gildan Activewear may also want to weigh company-specific factors such as revenue trends, margin performance, inventory management, input-cost pressures, capital allocation, and consumer demand across key apparel categories. Technical oversold conditions can persist longer than expected, particularly during periods of weak earnings sentiment or broader market volatility.

For bullish investors, GIL.CA's 28.9 RSI reading may serve as an early indication that the recent wave of selling is becoming exhausted, potentially creating a more attractive entry point. For more cautious investors, the oversold reading may simply warrant closer monitoring for evidence of support rather than immediate action.

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