High Probability ETF Trading: 7 ETFs You Need to Know for Monday (IJR, UWM, IWO, EWM, EWT, QQQQ, QLD)

The U.S. ETF markets are set to open with a slight bias toward the oversold when trading begins on Monday. While a number of country funds in Asia, for example, have continued to experience significant buying pressure, stocks in the United States – especially smaller cap and growth stocks – have seen their share of selling in the days leading up to the first trading day of 2011.

Here are 7 ETFs You Need to Know for Monday.

Small cap stocks continue to be among the most oversold heading into Monday’s trading. Among the exchange-traded funds exemplifiying this behavior are funds like the ^IJR^ and the ^UWM^ (below).

UWM chart

UWM is leveraged two to one to the daily performance of the Russell 2000 Index of stocks. The ETF has closed lower for three out of the past four trading days.

Also down for three out of the past four trading days is the ^IWO^.

Two Asia country funds are the most overbought exchange-traded funds in our database as 2011 begins. These ETFs are the ^EWM^ and the ^EWT^ (below).

EWT chart

Shares of EWT have closed higher for seven trading days in a row. The last five of those closes have been in overbought territory above the 200-day moving average.

The Nasdaq 100 has been under far more selling pressure going into the new year compared to the S&P 500. One way for traders to track – and potentially take advantage – of this development is through the ^QQQ^ or its leveraged cousin, the ^QLD^ (below).

 QLD chart

Shares of QLD have closed in oversold territory for three out of the past four trading days, and are set to open oversold when trading begins on Monday.

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