With the unfolding tragedy in Japan continuing to dominate news headlines, premarket futures are pointing to a significantly lower open (as I write with 30 minutes before the open, the Dow futures are down more than 200 points.)
Traders concerned about the additional volatility this week may want to consider a variety of risk management strategies, such as reducing position sizes and avoiding or minimizing leverage. Renewed oversold conditions from Monday’s trading will almost certainly become that much more intensely oversold, at least early in the Tuesday session.
Here are 7 ETFs You Need to Know for Tuesday.
U.S. markets managed to rally off their worst levels in Monday’s trading. But oversold conditions in major equity index ETFs like the ^QQQQ^ and the ^SPY^ have returned. Shares of both the QQQQ and the SPY have been down four out of the past six trading days.
The most oversold ETF in our database heading into trading on Tuesday is the ^SCZ^ (below).
Shares of SCZ have closed lower for seven days in a row, down another 2% on Monday alone.
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Among the country funds that have pulled back deeper into oversold territory are the ^EWG^ and the ^EWD^ (below).
Shares of EWD have closed lower for three days in a row ahead of Tuesday’s trading, with all three closes in oversold territory above the 200-day.
While traders are busy unloading shares of country funds representing European nations like Germany and Sweden, shares of the ^EWP^ have closed higher for the past two days in a row and are on the edge of overbought territory above the 200-day moving average.
The ^FAS^ (below) has pulled back for three out of the past four trading days.
FAS is still in neutral territory despite recent selling. FAS was last in oversold territory in late February. Then, two consecutive closes in oversold territory led to a sharp two-day rally in FAS over more than 3%.
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David Penn is Editor in Chief of TradingMarkets.com