ETF Trading with Ultimate PowerRatings: 5 ETFs for the Next 5 Days (EEM, VWO, FAS, FAZ, EWH)
Among the highest rated exchange-traded funds going into Tuesday’s trading are a pair of ETFs representing emerging markets.
Both the ^EEM^ (below) and the ^VWO^ earned one point ETF PowerRatings upgrades to 9 as of Monday’s close. These upgrades make both ETFs among the highest rated exchange-traded funds in our database.
Recall that based on our research into short term exchange-traded fund behavior, ETFs that earned ETF PowerRatings of 9 have made significant short term gains more than 74% of the time since 2003. ETFs that earned ETF PowerRatings upgrades to 10, our highest rating, have made significant short term gains nearly 79% of the time, based on the same quantified, backtested data.
Among leveraged ETFs, both the ^FAS^ (below) and the ^FAZ^ are moving closer to territory from which, historically, they have tended to reverse. In the case of FAS, this potential for reversal comes courtesy of an ETF PowerRatings upgrade to 8 as of Monday’s close. Additional selling in FAS will make the ETF vulnerable to further upgrades and, based on our simulated testing, potential reversal to the upside.
In the case of FAZ, the fact that the ETF earned an ETF PowerRatings downgrade to 3 as of the Monday close was a signal for short term traders to avoid the ETF – or consider the possibility of selling the exchange-traded fund short.
As with FAS, further short-term movement – particularly continued short term pessimism toward financial stocks – could provide a greater edge for traders looking to take advantage of FAZ should the fund earn continued downgrades. Based on our research, ETFs with ETF PowerRatings of 3 have tended to lose money over the short term. Further downgrades would only sharpen those edges against FAZ.
Among the highest rated ETFs in our database is a country fund: the ^EWH^ (above), which was upgraded to 10 ahead of trading on Tuesday. The ETF has been a top-rated fund for the past five days, with ETF PowerRatings ranging from 8 to 10.
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.