High Probability ETF Trading: 7 ETFs You Need to Know for Wednesday (DXD, SDS, SH, DOG, QID, XLF, EWS)

Equity index ETFs like the ^SPY^ remain overbought while conditions in the ^QQQQ^ have moderated, leaving the ETF less overbought than many of its fellow equity index ETFs.

Many of the exchange-traded funds noted in yesterday’s report as oversold continue to trade in oversold territory as trading begins on Wednesday. Most of these ETFs are in the retail sector, such as the ^RTH^.

Here are 7 ETFs You Need to Know for Wednesday.

The most oversold exchange-traded funds in our database going into trading on Wednesday are inverse leveraged ETFs for both the S&P 500 and Dow industrials – reflecting significant strength in those indexes. Traders interested in these kind of extreme oversold opportunities may want to keep an eye on the ^DXD^ and the ^SDS^ (below)


SDS chart

Shares of SDS have closed in extreme oversold territory for the four days heading into Wednesday’s trading.

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Note also that non-leveraged, inverse funds for these indexes are also available in the form of the ^SH^ and the ^DOG^.

Also increasingly oversold among leveraged equity index ETFs is the ^QID^ (below).

QID chart

The QID has closed lower for five out of the previous six trading days heading into Wednesday.

Meanwhile, not yet in oversold territory above the 200-day moving average but moving closer to those levels on Tuesday was the ^XLF^ (below).

XLF chart

The XLF closed lower for two days in a row on Tuesday and is continuing to pull back early in Wednesday’s trading.

The most oversold country fund? With a 2-period RSI in the mid-30s, the ^EWS^ was flat on Tuesday and moved sharply lower at the beginning of Wednesday’s trading.

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David Penn is Editor in Chief of TradingMarkets.com