High Probability ETF Trading: 7 ETFs You Need to Know for Friday (XLF, UYG, IWS, MDY, DIA, SPY, GDXJ)
With trading on Friday likely to start with stocks and ETFs in oversold territory, traders and investors will be looking to see whether or not late strength from Thursday follows through into additional buying over the course of Friday’s session.
As equity ETFs remain under heavy selling pressure, bond funds like the ^TLT^ and the ^AGG^ have climbed into overbought territory below the 200-day. Also increasingly overbought are inverse funds like the ^SDS^.
Here are 7 ETFs You Need to Know for Friday.
By sector, financial and banking exchange-traded funds are among the most oversold heading into Friday’s open. This includes both regular ETFs like the ^XLF^ (below), which has closed lower for three days in a row.
Note that all three of XLF’s lower closes have been in oversold territory above the 200-day moving average.
In addition leveraged financial funds like the ^UYG^ have also been moving lower into oversold territory above the 200-day. UYG has also closed down for the past three consecutive trading sessions.
Midcap stocks have also seen especially heavy selling during this market pullback. Among the ETFs that have moved significantly lower and into oversold territory are such funds as the ^IWS^ and the ^MDY^.
Both the ^DIA^ and the ^SPY^ (below) remain in oversold territory above the 200-day moving average after closing lower for three days in a row.
The SPY is at its most oversold levels since the last major pullback in the market back in November 2010.
The ^GDXJ^ (below) pulled back again on Thursday, dropping by well over 3% and sliding back into oversold territory above the 200-day.
GDXJ has closed lower for two out of the past three days. Both lower closes have been in oversold territory.
With 7 professional, quantified trading strategies for trading both bull and bear markets, High Probability ETF Trading by Larry Connors and Cesar Alvarez was voted one of the top 10 trading books of 2009 by SFO Magazine. Click here to find out why.
David Penn is Editor in Chief of TradingMarkets.com