ETF PowerRatings: Trading Strategies for an Oversold Asia
As Larry Connors noted this morning in his Daily Battle Plan (click here for your free 7-day trial), the current market is a Tale of Two Markets.
Here in the United States, markets are exceptionally overbought. The PowerShares QQQ Trust ETF
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PowerRating), for example, has closed in overbought territory above the 200-day moving average for three days in a row.
On the other side of the globe, however, Asian markets have been very oversold in recent days. The iShares FTSE/Xinhua China ETF
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PowerRating) has closed in oversold territory above the 200-day moving average for six consecutive trading days, 10 out of the last 11. Similarly oversold extremes are the case in other Asian ETFs, as well.
Now is a good time for short term ETF PowerRatings traders to look at those most oversold, highest rated ETFs when considering possible trades here in the second half of a holiday-shortened week. Our highest rated ETFs — those with ETF PowerRatings of 10 — have made significant gains in the short term nearly 80% of the time. And in moments like these, when there are a number of top rated ETFs for traders to choose from, picking from the top of the list — where the 10s are — may make more sense than ever.
If you like to trade options on ETFs, then be sure to click here to read our primer, ETF PowerRatings and Options Trading: Strategies for Short Term Gains.
Here are some of the top rated exchange-traded funds going into trading on Wednesday. All three in today’s report have ETF PowerRatings of 10 and are based on countries in Asia or the Pacific Rim.
The iShares MSCI Australia Index Fund ETF
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PowerRating) (above) has earned top ETF PowerRatings for the past four days, with the fund earning an upgrade to 10 on Monday and maintaining that high rating through Tuesday’s trading.
EWA has closed in oversold territory for the past two consecutive trading days, finishing on Tuesday with a 2-period RSI of less than 6.
Below is a chart of our next ETF, the iShares Malaysia Index Fund ETF
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PowerRating).
EWM also has an ETF PowerRating of 10, which it earned as a result of an upgrade from Tuesday’s ETF PowerRating of 9. The fund has closed for four out of the past five days in oversold territory, finishing on Tuesday with a 2-period RSI of less than 3.
Last but not least is a regional ETF, the iShares MSCI Pacific ex-Japan Index Fund ETF
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PowerRating) (below).
EPP has closed lower for five out of the past six trading days, earning both a top ETF PowerRating of 10 and an exceptionally low, 2-period RSI of less than 9.
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.
David Penn is Editor in Chief at TradingMarkets.com.