ETF PowerRatings Winner of the Week: Mighty Mid-Cap Value
I mentioned in my last ETF PowerRatings Winner of the Week column that there have been relatively few top-rated exchange-traded funds in early January due to the exceptionally overbought conditions we have experienced for much of the month.
One exception to these widespread overbought conditions was the pullback – and top 10 rating – in the ^EWW^ (see my “ETF PowerRatings Winners of the Week: Viva La Country Fund!”)
Another exception was the ^VOE^, which earned an ETF PowerRating of 10 on New Year’s Eve and closed higher by more than 3.5% five days later.
VOE closed on New Year’s Eve at 44.37. The close in oversold territory marked the fund’s third down close out of the past four trading days. Going into New Year’s Eve, VOE has closed with a 2-period RSI of less than 5, indicating an extremely oversold market for mid cap value stocks and the VOE.
In fact, the VOE was so oversold that buyers found the ETF almost immediately after reaching these oversold extremes – and top 10 rating. And within two days, VOE was up well over 1%. Five days later, the Vanguard Mid-Cap Value ETF was up more than 3.5% from its closing level the day it earned an ETF PowerRating of 10.
This is what high probability ETF trading with ETF PowerRatings is all about. Our research into exchange-traded funds has allowed us to create an ETF rating system that rates exchange-traded funds on a scale from 1 to 10. The lowest rated ETFs, those with ETF PowerRatings of 1 or 2, are best avoided – or sold short. But those ETFs with ETF PowerRatings of at least 8 have made significant, short term gains more than 75% of the time in our testing going back to 2003.
Our highest rated funds – those like VOE that earn ETF PowerRatings of 10 – made significant short term gains nearly 80% of the time.
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David Penn is Editor in Chief at TradingMarkets.com.