In yesterday’s 7 ETFs You Need to Know, we pointed to the possibility of energy exchange-traded funds slipping into oversold territory. Heading into trading on Wednesday, there is no more oversold sector than energy, with three out of the four of the most oversold exchange-traded funds in our database coming from the oil and gas industry.
The broader market, ex-energy, is in neutral territory with a modest bias toward the overbought due to Tuesday’s rally. Traders should be on the lookout for potential follow-through to the upside among recently oversold funds, as well as keeping an eye on the new weakness in energies.
Here are 7 ETFs You Need to Know for Wednesday.
As noted above, energy ETFs are the most oversold heading into Wednesday’s trading. This includes the ^IEO^ as well as our most oversold fund, the ^XOP^ (below).
Shares of XOP pulled back by well over 1% in trading on Tuesday, closing lower for a third day in a row. Tuesday’s close marks the fund’s second close in oversold territory above the 200-day moving average.
Also down three days in a row is the ^DIG^. Leveraged 2-to-1 to the Dow Jones U.S. Oil & Gas Index, DIG has returned to oversold territory above the 200-day.
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Still oversold but no longer moving lower for the time being is the ^SMH^ (below).
Shares of SMH pulled back sharply on the first trading day of the week, the fund’s second consecutive lower close. SMH rallied off its worst levels of the day on Tuesday to close in the green.
Down for a second session in a row and closing in oversold territory on Tuesday was the ^EWC^.
The ^GDX^ (below) slipped into oversold territory above the 200-day moving average ahead of trading on Wednesday.
GDX has closed lower for four out of the past five trading days.
After pulling back into oversold territory in Monday’s trading, the ^IWM^ (below) rallied into strength on Tuesday. Shares of IWM gained well over 1% on the day.
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David Penn is Editor in Chief of TradingMarkets.com