High Probability ETF Trading: 7 ETFs You Need to Know for Wednesday (EWY, EWJ, EPI, INP, RKH, UYG, RTH)
With three consecutive closes in overbought territory for both the ^SPY^ and the ^QQQQ^, the major equity indexes appear to be moving closer to levels from which they have tended to underperform. Overbought conditions can also be found in ETFs like the ^IWM^.
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.
Here are 7 ETFs You Need to Know for Wednesday.
A number of country funds have pulled back toward levels from which they have historically outperformed the average exchange-traded fund. These oversold ETFs include the ^EWY^ and the ^EWJ^ (below).
Shares of EWJ have closed lower for the past two trading days, closing in oversold territory on Tuesday. The current pullback represents the most oversold EWJ has been since rallying above its 200-day moving average in late September.
In addition to the two Asian funds noted above, exchange-traded funds based on the Indian stock market have also been pulling back in recent days. These include the ^EPI^ and the ^INP^ (below).
INP has closed lower for two days in a row, edging into oversold territory above its 200-day moving average on Tuesday. EPI has just begun to pullback, closing down on Tuesday after losing more than 1%.
Among ETFs that are overbought below the 200-day, the majority are financial or bank-related. This includes both the ^RKH^ and the ^UYG^ (below).
UYG is leveraged 2 to 1 to the Dow Jones U.S. Financials Index. Both of the ETF’s most recent overbought closes below the 200-day moving average led to short term drops in late September and again in early October.
Although off by less than half a percent on Tuesday, the ^RTH^ closed deeply in oversold territory above the 200-day moving average. The ETF had been overbought as recently as Monday’s close.
What do Warren Buffett and The Machine have in common? Click the link below to read how traders and investors using The Machine were able to take positions in a stock a full year before the Oracle of Omaha added the stock to his own investments. Click here to read “The Machine Buys FISV Before Warren Buffett.”
Then click here to save your spot at the next free, online presentation on The Machine by Larry Connors, founder and CEO of TradingMarkets.
David Penn is Editor-in-Chief at TradingMarkets.com.