ETF Overview
Going into trading on Monday, many of the major exchange-traded funds are in neutral territory. This includes the ^SPY^ and the ^QQQQ^, as well as sector ETFs like the ^XLF^ and the ^XLK^.
The same neutrality is in evidence in the major leveraged ETFs, as well. With the XLF in neutral, it is no surprise that the ^FAS^ and the ^FAZ^ are both earning neutral PowerRatings as Tuesday’s trading begins. The same is the case for ETFs representing small caps. Both the ^TNA^ and the ^TZA^ (below) are also in neutral territory.
So where can PowerRatings traders find edges in the current market?
Among the most widely traded ETFs, exceptionally low ETF PowerRatings can be found mostly in country funds. This includes the ^FXI^, the ^EWJ^ and, especially, the ^EFA^.
Let’s take a look at some of the biggest edges in the ETF market right now.
There are two exchanged-traded funds that have earned our highest rating for Tuesday. Those ETFs are the ^DPK^ and the ^EPV^ (below).
Note that DPK has bolted higher in the first few minutes of trading on Tuesday, gaining more than 5%.
I noted that country funds were among the lowest rated ETFs among the major regional and country-based exchange-traded funds. In addition to the low-rated country funds mentioned above, two other country funds – both based in Europe – have also earned low ETF PowerRatings of 1.
The ^EWQ^ and the ^EWG^ (below) have both become exceptionally overbought below the 200-day moving average, earning ETF PowerRatings of 1.
ETFs that have earned our lowest ETF PowerRating of 1 have made short term gains less than 21% of the time. This makes 1-rated ETFs ideal for traders looking to sell ETFs short.
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David Penn is Editor in Chief at TradingMarkets.com.