High Probability ETF Trading: 7 ETFs You Need to Know for Tuesday (IYZ, RSX, MOO, RJA, IYM, UYM, QQQQ)

With premarket futures suggesting significant selling as the holiday-shortened trading week begins, traders should expect additional weakness in materials and metals, as well as new pullbacks in many previously overbought markets, especially in the U.S. equity index ETFs.

Here are 7 ETFs You Need to Know for Tuesday.

The most oversold sector in the United States is telecommunications, with the ^IYZ^ closing lower for five days in a row, the last two sessions in oversold territory.

Pulling back for four days out of the past five trading days is the ^RSX^ (below).

RSX chart

Currently the most oversold country fund in our database, the RSX closed in oversold territory on Friday and has closed lower for seven out of the past nine trading days.

Funds representing agricultural commodities have pulled back in recent days, as well. Closing in oversold territory above the 200-day are such funds as the ^MOO^ and the ^RJA^. RJA pulled back by more than 2% on Friday.

Metals and materials ETFs have been under increasing selling pressure in recent days. This has helped pull funds like the ^IYM^ (below) near oversold territory above the 200-day.

IYM chart

Shares of IYM had closed in overbought territory for four out of the five trading days before Friday’s sell-off, which took IYM lower by more than 1%.

Also just outside of oversold territory above the 200-day is the leveraged alternative to the IYM – the ^UYM^.

The ^QQQQ^ (below) is the most oversold of the major U.S. equity index ETFs.

QQQQ chart

Shares of QQQQ have closed lower for the past two trading days. Although the ETF closed in overbought territory on Thursday, the QQQQ retreated on Friday to end the session in neutral territory heading into the three-day weekend.

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