ETF PowerRatings: Finding the Best ETFs to Trade When Markets Retreat
As Larry Connors said this morning in his Morning Market Intelligence report for his Daily Battle Plan (click here for your free trial), Tuesday’s pullback was not a question of if, but a question of when.
This is one of the many reasons why we prefer trading strategies based on buying the selling and selling the buying. No doubt that as markets became more and more overbought over the past several days, there was a growing number of traders becoming more and more confident about jumping on the moving train. If you climbed on board early enough AND exited soon enough, then you probably did okay.
But if you didn’t meet both criteria, well, this might be a good time to talk about quantified trading strategies based on buying weakness and selling strength.
ETF PowerRatings rate exchange-traded funds (ETFs) on a scale of 1-10 based on their potential for short term performance. Those ETFs that earned ETF PowerRatings of 1 or 2 are called “consider avoiding” funds and should not be bought for short term trades (unless you are considering selling them short).
However, those ETFs that have earned ETF PowerRatings of 8 or more have made significant short term gains more than 75% of the time going back to 2003. ETFs that earned our highest ETF PowerRating of 10 actually made significant gains in the short term nearly 80% of the time. This research is based on thousands of simulated ETF trades including most of the widely-traded exchange-traded funds.
Click here to try our ETF PowerRatings for free for a week.
For Wednesday and beyond, there are solid number of ETFs that have earned top ETF PowerRatings. These include country-based ETFs like the ^TUR^ (above) and the ^ILF^, to sector funds like the ^IGE^ and the ^VDE^ (below)
All four of the exchange-traded funds listed above have ETF PowerRatings of 9 going into trading on Wednesday.
Isn’t it time you gave ETF PowerRatings a try? Our top-rated ETFs have been correct nearly 80% of the time since 2003. Click here to launch your free, 7-day trial to our ETF PowerRatings today!
David Penn is Editor in Chief at TradingMarkets.com.