High Probability ETF Trading: 7 ETFs You Need to Know for Friday (EWG, EWD, TLT, AGG, RTH, DXD, SMH)

Thursday’s selling did little to relieve overbought conditions in ETF markets like the ^IWM^ and the ^QQQQ^.

Overall, bond funds are among the most oversold going into Friday’s trading, while ETFs like the ^XLK^ remained overbought.

Here are 7 ETFs You Need to Know for Friday.

Two of the most overbought exchange-traded funds (ETFs) in our database are country-based funds: the ^EWG^ and the ^EWD^ (below).

EWD Chart

Shares of EWD have closed higher for six consecutive trading days going into the final trading day of the week. The last four closes in the fund have been in overbought territory above the 200-day moving average.

The vast majority of ETFs that are oversold and pulling back toward levels from which they have historically reversed and moved higher are bond ETFs. These include the ^TLT^ and the ^AGG^.

Retail continues to be among the most oversold sectors going into trading on Friday.

RTH Chart

The ^RTH^ (above) has closed in oversold territory for the past three days in a row. Now trading above its 200-day moving average, RTH spent most of the summer trading below that critical level.

The ^DXD^ is among the most oversold exchange-traded funds in our database, leveraged or non-leveraged. Shares of DXD have closed lower for four out of the past five trading days.

The pullback in the ^SMH^ (below) has brought the ETF down into oversold territory above the 200-day moving average.

SMH Chart

SMH was highlighted in yesterday’s 7 ETFs You Need to Know as a fund that would soon become oversold if sellers remained aggressive in the fund. Thursday’s close represented the ETF’s most oversold close in more than two weeks.

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David Penn is Editor-in-Chief at TradingMarkets.com.