5 PowerRatings ETFs for the Next 5 Days: RWM, PSQ, SCC, RRZ, SSG
Buyers pushed stocks still higher on Monday, as the potential for massive infrastructure spending from the incoming Obama administration stoked buying in a number of sectors beyond industrial and basic materials.
The moment that we have been waiting for as swing traders — whether we are trading stocks or trading ETFs — has arrived. Markets have once again moved into extreme territory and more important than that, we have the quality/value mismatch that historically have meant winning, short term edges for stock and ETF traders.
This mismatch, to put it simply, involves strong stocks on pullback and weak stocks on bounces. When these anomalies reach extreme levels, as they did leading up to the Thanksgiving holiday most recently and appear to be doing again, we look to take advantage of the opportunity those mismatches provide: buying the pullbacks in strong stocks and selling the bounces in weak ones.
If nothing else, our Short Term PowerRatings provide both a map through the world of these anomalies and mismatches. Stocks and ETFs that have become too cheap earn high Short Term PowerRatings of 8, 9 or 10. Stocks and ETFs that have become too expensive, on the other hand, earn Short Term PowerRatings downgrades, warning us away from stocks and ETFs like the red spot on the back of a black widow spider.
Right now, the path of least resistance on this PowerRatings map takes us straight to short/inverse ETFs. Of our Top 25 PowerRatings stocks, none have Short Term PowerRatings higher than 8 and many have Short Term PowerRatings of 7. Of the 8-rated stocks, most are trading below their 200-day moving averages — making them ineligible for trading to the long side, as far as we are concerned. However, there are a number of short ETFs with 8-ratings, and these are among the places that stock and ETF traders should begin looking for the next opportunities in this market.
ProShares Short Russell 2000 ETF
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RWM |
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PowerRating) Short Term PowerRating 8. RSI(2): 13.72
ProShares Short QQQ ETF
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PSQ |
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PowerRating) Short Term PowerRating 8. RSI(2): 11.43
ProShares UltraShort Consumer Services ETF
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SCC |
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PowerRating) Short Term PowerRating 8. RSI(2): 5.27
Rydex Inverse 2x Russell 2000 ETF
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RRZ |
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PowerRating) Short Term PowerRating 8. RSI(2): 10.76
ProShares UltraShort Semiconductor ETF
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SSG |
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PowerRating) Short Term PowerRating 8. RSI(2): 23.05