After 4 Straight Down Days, Eight ETFs Offer High Probability Buy Signals

Larry Connors will be teaching a new Volatility Spikes course on October 25 and 28, and this is your opportunity to learn this strategy before it is no longer available the general public.

Click here for details and to register for one of our free upcoming live webinars where you will learn more about the Volatility Spikes Trading Seminar. 

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In the short term, the longer a trend persists the more likely it is to end. We have shown this with quantitative testing and provided the results in our guidebook, High Probability Trading with Multiple Up & Down Days. We demonstrated that buying ETFs after extended losing streaks could be profitable. Back-testing shows that buying an ETF with 4, 5 or 6 multiple down days after an additional 5% pullback has been profitable more than 80% of the time, for example. In the back test, trades are closed when ConnorsRSI ends the day above 70. This setup has also been profitable with other entries and exit rules.

Heading into Friday’s trading eight ETFs have closed down four days in a row and are set up as potential buys. These ETFs are all trading above their 200-day moving average (MA), below their 5-day MA, oversold with a ConnorsRSI reading below 20 and highly liquid with average daily volume of at least 250,000 shares. This list can be created and maintained as a filter with the The TradingMarkets Screener

Each of these ETFs should be considered a potential buy on additional weakness.

Now let’s look at the most overbought and oversold stocks (according to ConnorsRSI) heading into trading for October 3, 2014. ConnorsRSI is a proprietary and quantified momentum oscillator developed by Connors Research that indicates the level to which a security is overbought (high values) or oversold (low values).

 

5 Stocks Due For a Bounce

AGU (Agrium) is the most oversold stock with a ConnorsRSI reading of 1.61.

5 ETFs Due For a Bounce

URA (G-X Uranium ETF) is the most oversold non-leveraged ETF with a ConnorsRSI reading of 4.28.

5 Leveraged ETFs Due For a Bounce

YCS (Proshares Ultrashort Yen) is the most oversold leveraged ETF with a ConnorsRSI reading of 12.71.

5 Stocks Due For a Pullback

AXDX (Accelerate Diagnostics Inc) is the most overbought stock with a ConnorsRSI reading of 99.40.

5 ETFs Due For a Pullback

EFZ (Proshares Short EAFE MSCI) is the most overbought ETF with a ConnorsRSI reading of 91.83.

 

TradingMarkets Lists provide users pre-populated lists of stocks and ETFs identifying symbols with overbought and oversold ConnorsRSI and Bollinger Bands® readings. The Screener Lists are powered by The TradingMarkets Screener.

 

All data is as of the end of day on 10/2/2014.