Larry Connors will be managing money on a full-time basis beginning in 2015. Therefore, this summer will be the final time that he will be teaching his strategies and research to the public.
Starting in July until mid-September, Larry will be teaching his “Top 20 Strategies”.
The Top 20 Strategies represent the best of Larry Connors’ research. The strategies and research are not only what he believes to be the best; they are also the ones that the most number of customers have the highest level of success with.
Larry is hopeful that in teaching these strategies for the final time, you will have the same success.
Major stock market indexes closed down slightly on Thursday after spending most of the day in positive territory. Despite the relatively small declines in the averages, the broad market experienced a significant selloff. Digging deeper into the data we see that just 32% of NYSE-listed stocks ended Thursday higher and only 38% of NASDAQ-listed stocks were up for the day.
Selling pressure almost always creates buying opportunities. At the close on Thursday, eighteen ETFs had 4-period RSI readings below 25. This is one of the setup conditions for a strategy detailed in High Probability ETF Trading, the RSI25 strategy. To qualify as a buy under this strategy, the ETF needs to end the day above its 200-day moving average and the 4-period RSI of the ETF needs to end the day with a reading under 25. In the back test, trades were closed when the 4-period RSI closed above 55. Other exit strategies can be used to improve the trading performance.In back-testing on 20 of the most liquid ETFs for as long as the ETF had been traded, a period of up to 15 years, 77% of 786 buy signals were winners, delivering an average gain of 1.06% with an average holding period of just over six days.
While it is possible to enter buy orders for 18 individual ETFs, some traders might prefer a more focused list. We can eliminate a number of the ETFs by requiring that ConnorsRSI be below 20 and that the 100-day historical volatility (HV100 in the table below) be greater than the volatility of SPDR S&P 500 ETF (NYSE: SPY). This narrows the list to five trading candidates, concentrated in the natural resources sector.
Each of these ETFs should be considered a potential buy on additional weakness.
Now let’s look at the most overbought and oversold stocks (according to ConnorsRSI) heading into trading for September 5, 2014. ConnorsRSI is a proprietary and quantified momentum oscillator developed by Connors Research that indicates the level to which a security is overbought (high values) or oversold (low values).
INT (World Fuel Services Corp) is the most oversold stock with a ConnorsRSI reading of 3.56.
PFF (Ishares S&P US Preferred Stock Index) is the most oversold non-leveraged ETF with a ConnorsRSI reading of 3.33.
NUGT (Direxion Gold Miners Bull 3X) is the most oversold leveraged ETF with a ConnorsRSI reading of 8.58.
AMX (America Movil S.A.B. De C.V.) is the most overbought stock with a ConnorsRSI reading of 98.47.
HEDJ (Wisdomtree Intl Hedged Equity) is the most overbought ETF with a ConnorsRSI reading of 95.15.
TradingMarkets Lists provide users pre-populated lists of stocks and ETFs identifying symbols with overbought and oversold ConnorsRSI and Bollinger Bands® readings. The Screener Lists are powered by The TradingMarkets Screener.
All data is as of the end of day on 9/4/2014.