Going into trading at midweek, the number of top ETF PowerRatings funds is especially small. Due to the strong rally from last Thursday and the follow-through action to the upside on Tuesday, there are no exchange-traded funds (ETFs) with ETF PowerRatings higher than 6.
There are many ways to describe an overbought market. And an ETF market with no 10s, no 9s, no 8-rated ETFs is one of them.
Now is the time for high probability traders to truly earn the “high probability” part of their moniker by waiting on the sidelines while the current overbought conditions in the market wear themselves off. This will happen – as it always does – over the next few days as traders who bought into the rally early look to take profits.
A large part of being a high probability trader is in waiting for the right moment, the right set-up when the edges are not only armed, ready and on your side, but amassed in something resembling the Powell Doctrine of overwhelming force. This patience is what separates traders who are able to take maximum advantage of high probability trading strategies like ETF PowerRatings (click here to try ETF PowerRatings free for a week), from traders whose performance is inconsistent – or worse.
So while we wait for opportunities to develop. Let’s take a look at a few more top-rated ETFs, ETFs that earned top ratings of 10 over the past week and see how recent market strength has allowed traders to lock in significant gains in these funds.
The ^RSX^ earned an ETF PowerRating of 10 last Monday. The fund rallied from these oversold extremes almost immediately. But it took an additional two days for the RSX to rally above its 5-day moving average and back into overbought territory for a gain of well over 5% (below).
Another ETF that earned top ratings last Monday was the ^XES^ (below).
Like the Market Vectors Russia ETF, the XES bounced higher one day after earning a top ETF PowerRating of 10. Recall that ETFs that have earned ETF PowerRatings of 10 have made significant short term gains nearly 80% of the time in our historical testing. In this, XES was an excellent example. Three days after earning an ETF PowerRating of 10, XES climbing into strength and giving traders the opportunity to exit with gains of more than 5%.
The last fund in today’s report is the ^SEA^ (below).
As with XES, the Claymore/Delta Global Shipping ETF rallied the very next day after earning an ETF PowerRating upgrade to 10. Earning that top rating on Monday, February 8th, the SEA reached its exit levels a mere three days later, allowing ETF PowerRatings traders to exit with gains of more than 4%.
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.