Going into trading on Monday, the number of top rated stocks – those stocks that have earned PowerRatings of 9 or 10 – has increased modestly since Friday. Some of the stocks that have been among this list over the past few days – including stocks highlighted in the Ultimate PowerRatings Trading Report – have advanced, such as ^PAY^. In other instances, there are new stocks that have earned significant PowerRatings upgrades and, in the process, earned the attention of high probability short term traders looking for the best edges to trade every day.
On the exchange-traded fund front, the ranks of top rated funds have also increased. Energy-related funds continue to dominate the list but, as traders will see in today’s report, there are a number of potential ETF trading opportunities outside of the energy patch.
Both of the stocks in today’s report are from the medical/pharmaceutical group, and both enter trading on Monday with PowerRatings of 9.
^JAZZ^ (above) has closed lower for four days in a row, closing at its lowest level since mid-March. Friday’s selling took the stock into oversold territory with a 2-period RSI of less than 8.
Also among the pharmaceutical-related stocks in today’s report is ^VRUS^ (below).
VRUS has closed down for two out of the past three days, slipping into oversold territory above the 200-day moving average on Friday. Friday’s selling took VRUS down out of a short-term consolidation range, and further selling in the wake of this “breakdown” should not be surprise.
As I noted above, exchange-traded funds based on energy stocks continue to be the most numerous. In addition to top rated ETFs like the ^IEZ^ and the SPDR S&P Oil & Gas Exploration and Production ETF ^XOP^, however, there are a few high rated ETFs that aren’t among the energy crowd.
Among these potential opportunities are the ^IAI^ (above). IAI has been in a trading range since mid-March and recent selling has lowered the ETF to the lowest end of that range. That’s the good news. The not so good news is that IAI is moving closer to its 200-day moving average. Should the ETF close within 1.5 – 2.0% of this level, traders may want to pass on IAI.
Much watched health care stocks – as represented by the ^XLV^ (below) – have also been in retreat over the past few days.
XLV has closed lower for three days in a row, in a classic profit-taking pullback to end last week. This sell-off has put XLV in oversold territory above the 200-day moving average with a 2-period RSI of less than 10.
After shunning the energy patch for most of this report, our leveraged ETF trading opportunity will plunge right back into the oil well with today’s highlighted fund: the ^ERX^.
With so many regular energy ETFs earning top PowerRatings for Monday, it is little surprise that a leveraged ETF that consists of many of the same oversold energy stock would also earn top PowerRatings.
ERX rallied modestly on Friday, but that rally has not lifted the fund out of oversold territory. With a 2-period RSI of less than 10, ERX is still the kind of oversold market that historically has attracted short term buyers.
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David Penn is Editor in Chief at TradingMarkets.com.