ETF Strategies: ETF PowerRatings and Learning to Love – and Trade – the Big Pullbacks
In one of his many classic songs, legendary rock guitarist Jimi Hendrix claimed:
Now if 6
Turned out to be 9
I don’t mind.
I don’t mind.
ETF PowerRatings weren’t around when Hendrix composed “If Six Were Nine”, but when it comes to anticipating big pullbacks – and the potential rewards for traders following high probability ETF strategies – Jimi couldn’t have sounded more like an ETF PowerRatings trader if he had wanted to.
That’s because in the world of ETF PowerRatings – our new exchange-traded fund rating system that rates ETFs on a scale of 1 to 10 – an ETF that moved from a neutral rating of 6 to a top-rating of 9 is an ETF that is far more likely than the average ETF of making significant gains in the short term. This is why ETF strategies like PowerRatings can be ideal for traders working in the short term, “sweet spot” of 5 to 7 days.
Click here to learn more about ETF strategies using ETF PowerRatings.
Why so? An ETF with an ETF PowerRating of 9, based on our research into hundreds of ETFs going back to 2003, has made significant short term gains more than 77% of the time. Our highest rated ETFs – those with ETF PowerRatings of 10 – have made significant short term gains nearly 80% of the time. This is based on thousands of simulated ETF trades involving the most widely-traded ETFs.
The Market Vectors Russia ETF
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PowerRating) ended the day on Wednesday with an ETF PowerRating of 7. In the first few hours of trading on Friday, the ETF had pulled back by another 4%.
And a major ETF PowerRatings upgrade – for example, when an ETF with an ETF PowerRating of 6 earns an upgrade to 9 – is the kind of event that traders using ETF PowerRatings as part of their short term ETF strategies long for. These kind of upgrades accompany major pullbacks in exchange-traded funds, pullbacks that are very often the kind of “buy the selling, sell the buying†opportunities that make ETF strategies like ETF PowerRatings so effective for short term traders.
Recently earning an ETF PowerRatings upgrade from 5 to 7, the iShares FTSE/Xinhua China 25 ETF
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PowerRating) plunged by more than 4% early in trading on Friday.
In today’s report I have listed and included charts of three different exchange-traded funds with relatively average ETF PowerRatings that could experience significant ETF PowerRatings upgrades should the selling that began on Thanksgiving in Asia, Europe and the Middle East continue into Friday and perhaps Monday, as well.
Among the growing roster of 7-rated ETFs is a popular sector ETF, the Financial Select Sector SPDR ETF
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PowerRating). XLF pulled back by nearly 2% early in Friday’s trading.
PowerRatings ETF strategies are based on helping traders buy markets when they are relatively cheap and oversold and sell those markets when they become expensive and overbought. If you’d like to learn more about how ETF PowerRatings can help improve your ETF trading, click here to start your free 7-day trial today.
David Penn is Editor in Chief at TradingMarkets.com.