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In trading on Tuesday, shares of Diamond Offshore Drilling Inc (Symbol: DO) entered into oversold territory, changing hands as low as $11.165 per share. We define oversold 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 oversold if the RSI reading falls below 30.

In the case of Diamond Offshore Drilling Inc, the RSI reading has hit 28.3 — by comparison, the universe of energy stocks covered by Energy Stock Channel currently has an average RSI of 43.3, the RSI of WTI Crude Oil is at 45.9, the RSI of Henry Hub Natural Gas is presently 36.7, and the 3-2-1 Crack Spread RSI is 45.5. A bullish investor could look at DO's 28.3 reading 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.

Looking at a chart of one year performance (below), DO's low point in its 52 week range is $9.555 per share, with $17.32 as the 52 week high point — that compares with a last trade of $11.27. Diamond Offshore Drilling Inc shares are currently trading off about 2.5% on the day.

Click here to find out which 9 other oversold energy stocks you need to know about »

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.