Only Vietnam Remains Oversold Among Country ETFs
Reacting to news from the Ukraine, stock markets around the world sold off on Monday but most have quickly recovered. Heading into trading on Tuesday, thirteen foreign market equity ETFs were oversold. Only one, Market Vectors Vietnam ETF (NYSE: VNM), remains oversold. VNM is nearly twice as volatile as SPDR S&P 500 (NYSE: SPY) and ETFs with high volatility are more likely than low volatility ETFs to make large moves in the short term. Heading into trading on Thursday, VNM has a PowerRatings of 8.
PowerRatings are based on the relative strength or weakness of particular stocks or ETFs. The higher the rating, the greater the one week historical gain has been for stocks and ETFs with that rating. For best results, enter trades on stocks with a PowerRatings of 8 or higher with a limit order 3-7% below the previous day’s closing price. Higher % limit entries have historically shown a greater percentage of winning trades but higher % limit orders also reduce the chance of trade execution.
In the past, buying stocks with a rating of 8 on a 5% pullback the next day and selling five days later has been profitable 72% of the time. The average winner has gained 3.9%. Other entries and exits also show high winning percentages and large average gains.
As the chart above shows, three of the past four PowerRatings buy signals in VNM proved to be timely entries. The fourth signal has resulted in a cluster of buy signals which includes the current one.
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All data is as of the end of day on 3/5/2014.