ETF PowerRatings Strategies for Traders: FXI, IYT, ITB
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Today, we will look at three high PowerRating ETFs. As is often the case with stocks and PowerRatings, these ETFs are not as oversold as they could be and, as such, have ETF PowerRatings of 8. Additional weakness over the next few days will likely bring ETF PowerRatings upgrades to some or all of these names. That will be the moment for ETF PowerRatings traders to strike so, for now, keep an eye on these three ETFs should selling resume to push these funds lower.
The iShares FTSE/Xinhua China 25 ETF
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FXI |
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PowerRating) has earned an ETF PowerRating of 8. The ETF is most heavily weighted toward Chinese financial stocks (nearly 50% of the ETF’s holdings by sector), and has had an ETF PowerRating of 8 for the past few days as it has moved largely sideways.
A breakdown to new short term lows is one event that would likely cause a bump in FXI’s PowerRatings to 9 or even 10.
An ETF that has a ETF PowerRating of 10 only a few days ago, the iShares Dow Jones Transportation Average Index Fund ETF
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PowerRating), still has a relatively high ETF PowerRating of 8 as of Tuesday’s close.
Like FXI, IYT has also been trending sideways over the past few days and a further pullback to new short term lows would be one ideal signal that the ETF was likely to be upgraded to an even higher ETF PowerRating with a stronger edge.
Lastly, we’ll take a look at the iShares Dow Jones U.S. Home Construction Index ETF
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ITB |
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PowerRating).
This ETF shares with IYT a recent upgrade to 10. And even though ITB no longer has our highest rating, the fact that the ETF still has an ETF PowerRating of 8 shows that it is still vulnerable to further pullback and potential upgrade to 9 or 10. ITB closed on Tuesday with a 2-period RSI in the low 30s, but in the first few minutes of trading on Wednesday, that 2-period RSI has been sliced by a third as the ETF has moved lower.
Our highest rated ETFs have produced positive returns in the short term more than 80% of the time since 2003. Click here to launch your free trial to our ETF PowerRatings!
David Penn is Editor in Chief at TradingMarkets.com.