High Probability ETF Trading: 7 ETFs You Need to Know for Tuesday (JSC, DFJ, EWV, TIP, TYH, XLE, GULF)

U.S. stocks rallied into strength in trading on Monday, as traders continued to take advantage of recently oversold conditions above the 200-day moving average. The rally was broad-based, but while energy stocks were the biggest attractions, financials continue to lag behind on a relative basis.

With hopes that the very worst may be over in Japan, it is little surprise to see exchange-traded funds like the ^EWJ^ up well over 2% after Monday’s big rally. For traders considering exposure to Japan in the wake of the crisis, 7 ETFs You Need to Know this morning includes a few Japanese ETFs that traders may want to keep an eye on over the next few days.

Here are 7 ETFs You Need to Know for Tuesday.

The ^JSC^ is one option for traders and investors looking to take advantage of the growth potential of small cap stocks in Japan. JSC has closed higher for three days in a row, gaining more than 3% on Monday alone.

Also closing higher for three days in a row and climbing back above its 200-day moving average is the ^DFJ^.

Traders looking to bet against higher prices for Japanese stocks – or investors looking to hedge positions in Japanese stocks – may want to learn more about the ^EWV^ (below).

EWV chart

The EWV tracks 200% of the inverse of the daily performance of the MSCI Japan Index. The ETF is currently retreating from a move into significantly overbought territory below the 200-day moving average.

Given the strength of Monday’s move higher, there are precious few exchange-traded funds still in oversold territory above the 200-day moving average. One of the few is the ^TIP^.

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The return of buyers to the technology sector has helped the ^TYH^ (below) higher by more than 5% in trading on Monday.

TYH chart

Monday marked the fund’s third consecutive higher close, and its first close above the 5-day moving average since near the beginning of the month.

Energy continues to be a primary destination for traders and investors. Up more than 3% heading into Tuesday’s trading is the ^XLE^ (below).

XLE chart

XLE had closed in oversold territory as recently as last Wednesday and is now up more than 5% from those oversold lows.

Is there a way for exchange-traded fund investors and traders to get exposure to the markets of the Middle East? The ^GULF^ is one of the few options available. GULF includes stocks from Middle Eastern countries like the U.A.E., Kuwait and Qatar.

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David Penn is Editor in Chief of TradingMarkets.com