High Probability Trading Report: Wal-Mart, Health Care, South Africa

The markets are still reeling from the announcement that the SEC was filing a civil suit against Goldman Sachs for its alleged involvement in controversial derivative trading. The upshot for high probability traders is a wealth of new potential opportunities in markets that have become oversold. The potential new opportunities can be found in stocks as well as in exchange-traded funds, as today’s report will show.

Message from Larry Connors’ Daily Battle Plan:

“Please remember that pullbacks are often caused by concerns and this one will likely be no different than the many bull market pullbacks that have occurred over the past two decades. The key is to ignore the media and simply focus on the trades.”

Remember also that you can follow Larry Connors every day in his Daily Battle Plan: 51 Correct Trades out of 62 Since October 2008. Click here to learn more.

For now, let’s take a look at some of the high probability trading opportunities that are developing early in the week.

5 Stocks for the Next 5 Days

Going into trading this week, two of the stocks that are most oversold belong to the utilities camp: ^ETR^ and ^EXC^. But some of the bigger name blue chip stocks moving into oversold territory include ^MRK^ and ^WMT^ (below).

WMT Chart

Wal-Mart has closed in oversold territory for four consecutive trading days leading into Monday’s trading. Friday marked the stock’s sixth straight lower close.

WAG Chart

^WAG^ (above) is another stock that has been in retreat and should be watched for further weakness in the next few days. Walgreen’s dropped by well over 1% on Friday, moving particularly close to its 200-day moving average.

One of the ways we are able to spot stocks that have retreated to levels from which they have historically advanced is by using the techniques taught in the TradingMarkets Swing Trading College (currently in session), as well as in the book by Larry Connors and Cesar Alvarez, Short Term Trading Strategies That Work (click here to pick up your copy.)

5 ETF Funds for the Next 5 Days

On the exchange-traded funds front, there are some familiar names. Back in oversold territory above the 200-day moving average, for example, is the ^XLV^ (below).

XLV Chart

Closing in oversold territory above the 200-day moving average, XLV has been leading a variety of health care related exchange-traded funds lower in recent days. This includes ETFs like the ^VHT^ and the ^IYH^.

Also returning to oversold territory above the 200-day was commodity-related ETF, the ^MOO^.

MOO Chart

Friday market MOO’s fourth straight close in oversold territory. The pullback in MOO is reflective of weaker prices in commodity ETFs in general.

Last but certainly not least, our 5 ETF Funds for the Next 5 Days includes a pair of country funds, one representing Thailand and the other, the ^EZA^.

EZA Chart

EZA closed down by nearly 2% on Friday. Along with the ^THD^, EZA is the most oversold country fund in our database.

All five of the exchange-traded funds in today’s report have four or more trading signals from our High Probability ETF Trading Software as of the Friday close. To learn more about how to trading using our High Probability ETF Trading Software, click here for more information and a free, one-week trial.

David Penn is Editor in Chief at TradingMarkets.com.