• Free Book
  • Store
    • Books
    • Free First Chapters
    • Free Newsletters
  • Recent Articles

TradingMarkets.com

Quantified Stock Market Trading Strategies & Systems

  • Home
  • New Trading Research
  • Articles
    • Connors Research
    • ETFs
    • Options
    • Stocks
    • Volatility
    • Contributors
      • Larry Connors
      • Kevin Haggerty
      • Matt Radtke
  • Education
    • Trading Lessons
    • Connors Research
    • Glossary
    • Interview Archive
    • Videos
  • Guidebooks
  • Courses
  • Store
    • Quantamentals – The Next Forefront of Trading and Investing
    • New Book! The Alpha Formula
    • The Alpha Formula Strategy Add On
    • Swing Trading College 2019
    • Programming in Python For Traders
    • “Buy The Fear, Sell The Greed” – Best Seller!
    • Trading Books and Guidebooks
    • Street Smarts
    • Online Trading Courses
    • Private Mentoring with Larry Connors
    • Customized Trading Research
    • Amibroker/TradeStation Strategy Add On Modules

ETF PowerRatings: High Probability Trading Goes for the Gold in GLD, DGP, DZZ

March 9, 2010 by David Penn

What is the most oversold market right now? Gold.

Going into Tuesday’s trading, it would be a major understatement to say how overbought the broader market has become. Both the ^SPY^ and the ^QQQQ^ have closed not just in overbought territory, but in extreme overbought territory for six consecutive sessions.

By “extreme overbought territory”, I mean a 2-period RSI of more than 90. This is a rare event (I noted how rare in yesterday’s column – click here if you missed it). And it means that the markets are getting ever closer to that moment when those who have made impressive gains on the way up, start thinking about taking profits off the table.

And that profit-taking is often the beginning of the kind of pullback that high probability traders live for.

Until that happens, one place where high probability traders may want to look for markets that have already become oversold is the gold patch.

Of the four exchange-traded funds to make it onto the Most Oversold side of our TradingMarkets Most Overbought and Oversold list for Tuesday, two are gold-related exchange-traded funds: the ^GLD^ and the ^DGP^.

The SPDR Gold Trust ETF closed below its 5-day moving average for the first time since late February. GLD’s pullback was the third consecutive down close for the ETF and brought the fund down into oversold territory above the 200-day moving average.

GLD Chart

GLD has an ETF PowerRating of 5.

Also making our modest Most Oversold list for Tuesday was a leveraged gold-related fund (note, actually). The DB Gold Double Long ETN (below).

DGP Chart

Like GLD, DGP slid into oversold territory from neutral conditions on Monday, closing below its open for three days in a row. DGP has a Leveraged ETF PowerRating of 6.

The last ETF in today’s report is one that was on the “Most Overbought” side of the Most Overbought/Most Oversold ledger. Also a gold-related fund, the ^DZZ^ closed in overbought territory below the 200-day moving average on Monday.

DZZ Chart

Overbought markets below the 200-day moving average are markets that high probability ETF traders should avoid or sell short. In the case of DZZ, additional strength below the 200-day moving average – and an even more extremely high 2-period RSI – will likely make DZZ a potential opportunity for high probability traders looking to trade on the short side – even as the rest of the market ramps higher.

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.

Filed Under: Commentary, Recent Tagged With: etf funds, ETF PowerRatings, High Probability ETF Trading, trading ETFs

CONNORS RESEARCH
TRADERS JOURNAL
  Thank you for Signing Up
Please correct the marked field(s) below.
1,true,6,Contact Email,2 1,false,1,First Name,2 1,false,1,Last Name,2

Free Webinar by Larry Connors and Chris Cain, CMT

new Book By Larry Connors and Chris Cain, CMT

The Alpha Formula

Buy The Fear, Sell The Greed – $29.95 Limited Time Offer!

Buy The Fear, Sell The Greed

Programming in Python For Traders

Programming in Python For Traders

Company Info

The Connors Group, Inc.
185 Hudson St., Suite 2500
Jersey City, NJ 07311
www.cg3.com

About Us

About
Careers
Contact Us
Link To Us

Company Resources

Help
Privacy Policy
Return Policy
Terms & Conditions

Properties

TradingMarkets
PowerRatings
Connors Research

Connect with TradingMarkets

Contact

info@cg3.com
973-494-7311 ext. 628

Free Book

Short Term Trading Strategies That Work

© Copyright 2019 The Connors Group, Inc.

Copyright © 2019 · News Pro Theme on Genesis Framework · WordPress · Log in

TradingMarkets.com logoTradingMarkets.com supplies active traders with the education and tools they need to make trades based on data - not emotion and delivers content, tools, data, and trading systems aligned with the proprietary trading methodologies developed by Connors Research. Learn more about our products and services here!