High Probability ETF Trading: 7 ETFs You Need to Know for Wednesday (IYW, XLK, XHB, ITB, EWZ, VUG, UYG)

A return to overbought conditions above the 200-day moving average encouraged another round of profit-taking in most equity index ETFs, both here in the United States as well as abroad. Among the most oversold of the major U.S. equity index ETFs is the ^QQQQ^, which pulled back by more than 1% on Tuesday and was among the ETFs we noted yesterday in 7 ETFs You Need to Know.

Here are 7 ETFs You Need to Know for Wednesday.

Tuesday’s broad-based sell-off brought a wide variety of sector-based exchange-traded funds down into oversold territory. This includes a number of representatives from the tech sector such as the ^IYW^ and the ^XLK^ (below).

XLK chart

Shares of XLK pulled back by nearly 2% heading into trading on Wednesday. The pullback in XLK comes just after a three-day rally in the ETF that took the fund back into overbought territory short term.

Real estate and home construction related fund were also in pullback mode on Tuesday. Moving back into oversold territory above the 200-day moving average were the ^XHB^ and the ^ITB^.

Still rangebound and trading just above its 200-day moving average as of Tuesday’s close is the ^EWZ^. The ETF has closed higher for four days in row before Tuesday’s pullback, which took the ETF down by well over 1%.

Also down well over 1% on Tuesday were shares of the ^VUG^ (below).

VUG chart

Prior to Tuesday’s sell-off, shares of VUG had closed higher for three days in a row above the 200-day moving average, with the last two closes in overbought territory above the 200-day moving average.

Financials were also attracting strong selling heading into the middle of the week, with the ^UYG^ (below) down more than 4%.

UYG chart

UYG’s pullback comes in the wake of a brief, two-day rally that took the fund into short term overbought territory above the 200-day. UYG was trading in oversold territory as recently as last week.

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