High Probability ETF Trading: 7 ETFs You Need to Know for Tuesday (EZA, VGK, EWZ, RSX, XLY, XLF, SPY)

Divergences in the major equity index ETFs in the United States continue, with the ^QQQQ^ rallying back into overbought territory above the 200-day and the ^SPY^ pulling back for a third day to close oversold.

Note that gold-related ETFs, which had seen heavy selling in recent days, have started to see traders respond to the signficantly oversold conditions created by the profit-taking turned panic-selling in many instances.

Here are 7 ETFs You Need to Know for Tuesday.

As oversold as many ETF markets in the United States are, some of the most oversold exchange-traded funds in our database are country and regional-based funds. These include some extremely oversold ETFs like the ^EZA^ and the ^VGK^ (below).

VGK chart

Shares of VGK have closed lower for five trading days heading into Tuesday’s open.

Members of the so-called BRIC nations are also seeing oversold conditions as the week begins. Typical of pullbacks in this area are the four-day retreats in the ^EWZ^ and the ^RSX^ (below).

RSX chart

Closing in oversold territory for the past two days in a row, the RSX is at its most oversold levels since its last major pullback in mid-November.

Not yet in oversold territory but down three days in a row were shares of the ^XLY^ as of Monday’s close.

Down three days in a row – the past two in oversold territory – the ^XLF^ (below) has closed at its lowest level in nearly a month.

XLF chart

Also down for the past three consecutive trading days was the ^SPY^. The SPY closed in oversold territory on Monday despite not moving significantly below recent closing lows.

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.com