Emerging Markets Join Tech, Financials in Oversold Territory: 7 ETFs You Need to Know for Tuesday

The Wall of Worry earned another brick on Monday as Standard and Poor’s hit the U.S. with a negative debt outlook. Despite closing in oversold territory above the 200-day moving average, a number of funds – from technology to emerging markets – managed to end Monday’s session well off the day’s lowest levels.

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Here are 7 ETFs You Need to Know for Tuesday.

After rallying into strength on Friday, the ^SPY^ (below) is back in oversold territory above the 200-day moving average.

SPY chart

The ETF pulled back by more than 1% in trading on Monday, but managed to close well off its session lows.

There are few sectors more oversold than financials heading into trading on Tuesday. The ^XLF^ pulled back by more than 1% to close lower for four out of the past five trading days.

Closing lower for six out of the past seven trading days and very oversold above the 200-day moving average ahead of Tuesday’s session is the ^XLK^ (below).

XLK chart

In addition to U.S. stocks, emerging market equities are also being aggressively sold early in the trading week. Down more than 2% on Monday was the ^EEM^.

Closing higher for a fourth trading day in a row is the ^SLV^ (below).

SLV chart

SLV last closed in oversold territory above the 200-day moving average on March 17th. The stock is up more than 26% since then.

While precious metals ETFs continue to move higher, ETFs like the ^GDX^, which are based on the stock prices of gold mining companies, have become oversold in recent days. GDX, for example, has closed lower for five out of the past six trading days.

Pulling back by nearly 2% ahead of trading on Tuesday is the ^FXI^.


“What else is important to successfully trade ETFs?”

“Execution. This means putting together a plan as to how you are going to take the strategies and apply them to your trading. And then executing the trades over and over again.

The above was an excerpt from Larry Connors’ most recent book, High Probability ETF Trading Strategies. To find out how to order your copy of the book SFO Magazine called one of the best trading books of 2009, click here.

David Penn is Editor in Chief of TradingMarkets.com