Buyers Bid Overbought Markets Higher in Germany, Japan; Value Funds Climb: 7 ETFs You Need to Know for Monday

Overbought conditions in stocks are likely to become even more oversold as trading begins on Monday. Between the lagging effects of the End of Month syndrome and the news that Osama bin Laden was killed over the weekend by American special forces, an upward bias toward stocks – at least early in Monday’s session – should be expected.

Special to 7 ETFs You Need to Know: If you are not familiar with the research Larry Connors has done on the bullish tendencies in stocks late in the month, then click here to find out how to get your free copy of Short Term Trading Strategies That Work.

Here are 7 ETFs You Need to Know for Monday.

A number of country funds are among the more overbought exchange-traded funds heading into trading on Monday. These include the ^EWJ^ and the  ^EWG^.

Closing lower for a third day in a row on Friday is the ^FXI^ (below).

FXI chart

Shares of FXI have closed lower for four of the past five trading days, with the past three consecutive sessions all in oversold territory above the 200-day moving average.

Also down three in a row ahead of Monday’s open is the  ^EPI^. Other India funds were up slightly on Friday, but most are trading just above their 200-day.

The ^XRT^ (below) has pulled back for two days in a row, and is just outside of oversold territory.

XRT chart

XRT had rallied into overbought territory for the two days leading into the fund’s current pullback.

Another area where overbought conditions dominate is the market for value stocks, as seen by the consecutive higher highs in exchange-traded funds like the ^IWS^ (below).

IWS chart

In addition to the strength in the IWS, other small/midcap funds with a value-bias have also climbed into overbought territory in recent days.

Pulling back modestly on Friday, the ^SLV^ will be watched closely by traders anticipating even greater selling in the fund in the wake of the news that U.S. special forces units killed Al Qaeda mastermind, Osama bin Ladin over the weekend.

David Penn is Editor in Chief of