Most major equity index ETFs like the ^SPY^ and the ^QQQ^ are overbought heading into the final trading day of the week. Oversold conditions and ETFs that are pulling back have become more difficult to find as buyers pushed the markets higher into the end of the month and the end of the quarter.
As such, traders should be on the lookout for signs of potential profit-taking, which could begin in some of the recently better-performing sectors as soon as today’s session.
Here are 7 ETFs You Need to Know for Friday.
Heading into trading on Friday, the most oversold country fund in our database – in fact, the only oversold country fund in our database given the recent strength in the ^EWJ^ is the ^EWP^ (below).
Shares of EWP have essentially been rangebound for the past week, with the ETF moving toward the lower end of that range on Thursday.
Perhaps the most oversold ETF in the market right now is the ^ITB^. ITB has closed lower for four days in a row, the last two in oversold territory above the 200-day moving average.
Much like the EWP above, the ^EWU^ has also been trading in a tight range for the last week. But any significant selling today on Friday could easily send the fund into oversold territory for the first time since mid-March.
Also trading just outside of oversold territory above the 200-day is the ^SMH^ (below).
SMH has closed lower for two out of the past four trading days, and ended trading on Thursday below its 5-day moving average for the first time in more than a week.
Traders and analysts have been paying more and more attention to the financials, which have not performed as well as other sectors like energy and technology over the past few months. Among the exchange-traded funds that are being used to track the financial sector as a whole is the ^UYG^ (below).
Heading into the final trading day of the week, however, shares of UYG are actually short term overbought, having closed higher for three days in a row – all three in overbought territory above the 200-day moving average.
The bull market in emerging markets continues to drive exchange-traded funds like the ^EEM^ deeper into overbought territory. EEM has closed higher for three days in a row and nine out of the past 11.
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David Penn is Editor in Chief of TradingMarkets.com