Ultimate PowerRatings Trading Report: Overbought Spain, Overbought Tech
Before turning to look at potential new opportunities, let’s take a look back at some of the stocks and exchange-traded funds (ETFs) that have been highlighted in recent columns.
A week ago, I pointed to two stocks – Be Aerospace ^BEAV^ and Triumph Group Inc. ^TGI^ – that PowerRatings traders should keep an eye on over the next few days. Since then, both BEAV and TGI have both advanced, gaining just over 2%.
Also gaining from last week’s report (“Ultimate PowerRatings Trading Report: Overbought Markets and Inverse Leveraged ETFs”) was the iShares S&P U.S. Preferred Stock Index Fund ETF ^PFF^. I wrote about the recent performance of preferred stock ETFs recently in “High Probability ETF Trading Report: Power to the Preferreds and the Dollar Pullback.”
Now let’s take a look at potential opportunities over the next few days.
Stocks:
The number of top rated stocks remains relatively modest – given the enduring overbought status of the U.S. markets. That said, there are a few markets that PowerRatings traders may want to keep an eye on should markets move lower in the near term.
Clean Energy Fuels Corporation ^CLNE^ is moving higher early in trading on Tuesday. But going into today’s trading, CLNE had closed in oversold territory for four consecutive trading days, earning a Stock PowerRating of 9.
Moving to the lower end of its trading range is the Principal Financial Group ^PFG^.
PFG has closed in oversold territory for three days in a row and has earned a Stock PowerRating of 9.
Remember that the key to trading PowerRatings stocks is to take advantage of intraday weakness to pick up shares at the lowest price possible. If you need a refresher on how to trade using intraday weakness, click here.
Exchange-traded Funds:
On the ETF front, there are both high and low rated funds that traders should be aware of this week. Today, I want to focus on a low-rated ETF.
The iShares MSCI Spain Index Fund ETF ^EWP^ closed on Monday with an ETF PowerRating of 2. ETFs with ETF PowerRatings of 2, according to our testing, have been among the worst performing ETFs in the short term. In fact, 2-rated funds are as likely to move lower in the short term as 9 and 10-rated funds are to move higher.
Traders looking for opportunities to bet against exchange-traded funds may find fewer better potential choices than the overbought market for EWP.
Leveraged ETFs:
Looking for leveraged ETF trading strategies in all the wrong places? Today’s Ultimate PowerRatings Trading Report includes two leveraged ETFs – one increasingly overbought and one increasingly oversold – that traders should keep on their watch lists should market volatility stoke significant movement in these funds.
First up is the ProShares Ultra Dow Jones Crude Fund ^UCO^.
UCO has closed in oversold territory for two days in a row, earning a leveraged ETF PowerRating of 9. Continued weakness here could result in a further upgrade in this commodity-based market.
The other leveraged ETF for traders to look at for today is a technology fund, the Direxion Technology Bear 3x Shares ^TYP^.
TYP also has closed in oversold territory for the past two consecutive trading days, and just earned a leveraged ETF PowerRatings upgrade from 8 to 9. Here, in contrast to the market for crude oil, continued aggressive buying in technology is creating extreme conditions for inverse technology funds like TYP, pushing them to levels from which they have historically advanced.
Find out more about what ETF PowerRatings can do for you and your trading. Click here to launch your free, 7-day trial to our ETF PowerRatings today.
David Penn is Editor in Chief at TradingMarkets.com.