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You are here: Home / ETFs / Commentary / High Probability ETF Trading: 7 ETFs You Need to Know for Monday (IBB, EWP, EWD, PPH, TIP, UDN, XLV)

High Probability ETF Trading: 7 ETFs You Need to Know for Monday (IBB, EWP, EWD, PPH, TIP, UDN, XLV)

November 8, 2010 by David Penn

The major domestic equity ETFs continue to trade in overbought territory above the 200-day moving average. This includes the ^SPY^, the ^IWM^ and the ^QQQQ^, even though the latter was unchanged on Friday. Volatility remains exceptionally low, with the ^VXX^ closing at a new low to end the week.

The enduring strength in sectors like financials and technology has helped leveraged ETFs like the ^FAZ^ and ^SSG^ pull back to exceptionally oversold levels.

Here are 7 ETFs You Need to Know for Monday.

Shares of the ^IBB^ closed lower for a second consecutive trading day on Friday. IBB is now in oversold territory above the 200-day moving average.

The two most oversold country funds going into trading on Monday are the ^EWP^, which closed in oversold territory on Friday, and the ^EWD^ (below).

EWD Chart

Shares of EWD have yet to close in oversold territory above the 200-day moving average. But if the EWD has another selling day like it did on Friday when it pulled back by more than 2%, the ETF could easily be in oversold territory by mid-week if not sooner.

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.

Among sector ETFs, the ^PPH^ (below) has pulled back into oversold territory above the 200-day.

PPH Chart

PPH had closed higher for four days in a row before Friday’s pullback.

There is no more oversold asset class than bonds right now, with a wide number of bond ETFs closing in oversold territory above the 200-day moving average going into Monday’s trading. This includes the ^TIP^, which edged lower on Friday.

Pulling back toward oversold levels on Friday was the ^UDN^ (below).

UDN Chart

UDN was oversold above the 200-day as recently as late October. Then, shares rebounded from a two-day pullback to rally more than 2% over the next five days.

Also pulling back to near oversold territory above the 200-day moving average on Friday were shares of the ^XLV^. XLV closed lower after gaining for four consecutive trading days.

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

Filed Under: Commentary, Recent Tagged With: 7 ETFs You Need to Know, ETF Trading, High Probability ETF Trading, trading etf, Trading Strategies

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