Buyers continued to push retail-based exchange-traded funds higher ahead of trading on Tuesday, with technology ETFs like the ^XLK^ also experiencing sustained buying interest – and increasingly overbought conditions.
Financials were the epicenter of much of the selling on Monday, dragging financial ETFs like the UYG^ and the ^XLF^ further below their 200-day moving averages.
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Asia country funds are among the most oversold heading into trading on Tuesday. At the top of this list is the ^EWH^, noted yesterday. But exchange-traded funds like the ^FXI^ (below) have pulled back above the 200-day moving average and will be in oversold territory on any additional selling.
Down more than 3% and pulling away from its 10-day moving average on Monday was the ^VXX^. As the VXX, which tracks the CBOE Volatility Index, stretches away from its 10-day moving average to the downside, the risks of a market reversal have increased historically speaking.
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Exchange-traded funds representing European equities in general continue to be under selling pressure ahead of Tuesday’s open. Typical of the weakness and near oversold conditions among European country funds are the pullbacks in the ^VGK^ and the ^IEV^ (below).
Down for two days in a row and pulling back by more than 1% on Monday, shares of IEV rallied from their intraday lows to close near the fund’s opening price.
Strength in technology continues to make exchange-traded funds like the (below) ^SMH^ into overbough extremes above the 200-day moving average.
SMH edged higher by more than 1% on Monday, closing higher for a fourth trading day in a row.
And strength in technology means, in part, weakness in funds like the ^QID^ . QID is leveraged 2 to 1 to the inverse of the Nasdaq 100. This means as the technology-heavy Nasdaq 100 moves higher, the QID moves lower.
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David Penn is Editor in Chief of TradingMarkets.com