ETF PowerRatings: Top Funds for Traders and Trading Around the 200-Day

Going into trading on Wednesday, the number of top rated exchange-traded funds – those ETFs that earned an ETF PowerRating of 10, was higher than usual. This means that there remain a large number of potential opportunities for short term traders looking to take advantage of recent aggressive selling in a number of markets.

These top rated ETFs range from country ETFs like the ^EWZ^ and the ^RSX^ to sector exchange-traded funds like the ^XLF^ and equity index ETFs like the ^IWM^.

Recall that our research into short term ETF price behavior going back to 2003 indicates that ETFs with ETF PowerRatings of 10 have made significant short term gains nearly 80% of the time. This is based on thousands of simulated trades in a wide variety of liquid ETFs. Even those ETFs that earned slightly lower ETF PowerRatings of 8 or 9 managed to make similarly significant gains more than 75% of the time in our testing.

One note that high probability ETF traders should keep in mind is that the strength of the current sell-off has pushed a number of non-leveraged ETFs below their 200-day moving averages.

While there are some instances in which high probability ETF traders can trade ETFs below the 200-day moving average (much of this will be discussed in Larry Connors’ TradingMarkets Leveraged ETF Trading Course offered later this spring), when it comes to high probability trading in regular, non-leveraged ETFs, the research tells traders to only buy oversold ETFs above the 200-day moving average and to only sell overbought ETFs below the 200-day moving average.

FXI Chart

Some of the ETFs that have slipped below their 200-day moving average in recent days include many of the Chinese funds – from the ^FXI^ (above) to the ^TAO^. Others include commodity-related funds such as the ^DBA^.

Until these exchange-traded funds rally back above their 200-day moving averages, high probability traders should avoid both new positions and adding/scaling-in to existing positions in funds below the 200-day.

Find out more about what ETF PowerRatings can do for you and your trading. Click here to launch your free, 7-day trial to our ETF PowerRatings today.

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David Penn is Editor in Chief at