High Probability ETF Trading: 7 ETFs You Need to Know for Tuesday (EWT, UDN, IYZ, EWY, QQQQ, QID, UUP)
Overbought conditions continued to define most equity ETF markets heading into trading on Tuesday. This includes overbought conditions in both the large caps of the S&P 100 (basis the ^OEF^) and the small caps of the Russell 1000 (basis the ^IWM^).
Internationally, country funds in general are overbought, though a number of ETFs representing equity markets in India such as the ^PIN^ and the ^EPI^ have begun to pullback from recent year-to-date highs.
Overbought? Oversold? Overwhelmed? Click the link below to learn objective, quantified strategies for buying and selling exchange-traded funds in the short term.
Learn How to Trade ETF Funds Successfully: TPS and the Science of Scaling-In.
Here are 7 ETFs You Need to Know for Tuesday.
Among the exchange-traded funds pulling back into oversold territory ahead of trading on Tuesday are the ^EWT^ and the ^EWY^ (below)
Shares of EWY have closed lower for two out of the past three trading days. The ETF was down more than 1% intraday on Monday before buyers bid the fund higher going into the close, paring those
losses somewhat.
One of the exchange-traded funds from Monday’s report, the ^IYZ^ closed in oversold territory for a second consecutive trading day on Monday.
Two ETFs that traders may want to keep an eye on over the next few days are currently trading in neutral territory. These funds are the ^UUP^ and the ^UDN^ (below).
Additional selling in the UDN in the near term could result in an ETF that is at levels from which it has historically advanced. The fund has not closed in oversold territory since rallying and
closing above the 200-day moving average back in mid- to late September.
The ^QQQQ^ edged higher on Monday, closing in overbought territory above the 200-day moving average for a second straight trading day.
Traders interested in potential opportunities in leveraged ETFs that have become exceptionally oversold may want to put the ^QID^ on their watchlists.
The QID is becoming increasingly oversold – although not as oversold as the ETF became during its decline in the second half of September. Note that our research suggests that leveraged ETFs
become truly oversold at levels significantly more extreme than those for regular, non-leveraged ETFs.
Have you seen The Machine? The Machine is the first financial software that lets traders and investors build quantified portfolios of backtested mean reversion and trend-following strategies. If you own an IRA or manage investments in excess of $250K, then you owe it to yourself to attend the next free, online presentation on The Machine by TradingMarkets founder and CEO, Larry Connors. To learn more and to save your spot, click here.
David Penn is Editor-in-Chief at TradingMarkets.com.