High Probability ETF Trading: 7 ETFs You Need to Know for Monday (XLB, IYM, UYM, ITB, XLB, SLV, EWT)
Metals and materials are among the most overbought sectors going into trading on Monday, and exchange-traded funds representing both commodity companies in this space as well as the commodities themselves have moved higher and higher above the 200-day moving average over the pst few days.
Bond funds continue to be the few areas of oversold conditions in the market. This is due largely to strength and continued buying on the equity side. Any pullback in stocks will likely help bring buyers back to these oversold bond ETFs.
Here are 7 ETFs You Need to Know for Monday.
As noted above, exchange-traded funds representing the basic materials and precious metals areas of the economy dominante the ranks of the most overbought going into trading on Monday. Closing in overbough territory above the 200-day moving average ahead of Monday’s open were shares of both the ^XLB^ and the ^IYM^ (below).
IYM has closed higher for three days in a row heading into Monday’s trading. All three of those closes have been in overbought territory above the 200-day.
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Also increasingly overbought are leveraged ETFs providing exposure to this sector such as the ^UYM^. The UYM is leveraged two-to-one to the Dow Jones U.S. Basic Materials Index.
Home construction and homebuilding represent the most overbought equity sectors in the market right now. Increasingly due for a reversal are ETFs like the ^ITB^ and the ^XHB^ (below).
Up three in a row heading into trading on Monday, the XHB is back above its 200-day moving average.
Buyers also continue to pour into precious metals ETFs. Closing higher for a fifth consecutive trading day on Friday was the ^SLV^ (below).
SLV last pulled back into oversold territory above the 200-day moving average on the day after the Thanksgiving holiday in November.
Among country ETFs, the most overbought by far is the ^EWT^
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David Penn is Editor in Chief of TradingMarkets.com