High Probability ETF Trading: 7 ETFs You Need to Know for Monday (UNG, EPI, INP, EWH, XRT, RTH, XLU)

With anxiety over the Ireland financial crisis beginning to subside, traders and investors are likely to find renewed overbought conditions early in trading on Monday.

As noted below, retail remains the most overbought sector in the market, short-term. Looking at markets that are pulling back above the 200-day moving average, there are significant pullbacks in India exchange-traded funds in particular, while the utilities group continued to trade in oversold territory.

Here are 7 ETFs You Need to Know for Monday.

Basis materials continue to be among the stronger and more overbought sectors with precious metals funds and energy ETFs like the ^UNG^ continuing to rank among the most overbought in the market.

The most oversold country fund in our database is the ^EPI^ (below).

EPI chart

Shares of EPI have been trending lower since the beginning of the month, and are back in oversold territory above the 200-day moving average after a Friday pullback of nearly 2%. Not quite in oversold territory is fellow India country fund, the ^INP^, which was down just over 1% ahead of trading on Monday.

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Closing just outside of oversold territory above the 200-day moving average is the ^EWH^ (below).

EWH chart

Like EPI and INP, shares of EWH have pulled back into oversold territory above the 200-day moving average. The ETF was oversold as recently as Wednesday, just before a one-day bounce of well over 1%.

Aggressive buying in retail stocks has made two retail exchange-traded funds, the ^XRT^ and the ^RTH^, among the most overbought ETFs in our database going into trading on Monday. (Be sure to check out the cover of this past weekend’s Barron’s magazine for another reminder of how overbought – and potentially overconfident – traders and investors have become on retail and consumer discretionary spending!)

Sellers continue to dominate trading in the ^XLU^ (below).

XLU chart

XLU has closed in oversold territory above the 200-day moving average for two out of the past four trading days, with Friday’s close again bringing the ETF toward levels from which it has historically outperformed in the short term.

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David Penn is Editor in Chief of TradingMarkets.com