Friday’s sell-off brought a significant number of exchange-traded funds lower into oversold territory from what were in many cases extremely overbought levels. Just when everyone thought that the market would only continue to climb, the sell-off that was always lurking somewhere in the future finally arrived.
Among the exchange-traded funds high probability traders will be looking at over the next few days are ETFs like the above three that have earned top ETF PowerRatings going into trading on Monday.
^EWZ^
All three of the ETFs above have earned ETF PowerRatings upgrades to 9. In quantified backtesting going back to 2003, exchange-traded funds with ETF PowerRatings of 9 have made significant short term gains more than 75% of the time. For short term traders looking for the best ETFs to trade over the next few days, ETFs that have earned top ETF PowerRatings have historically been among the best places to look.
^ILF^
ETF PowerRatings are based on mean-reversion approach to trading, an approach that is not only quantified in backtests involving thousands of simulated trades, but also is one that has been used by professional traders and market makers for decades to take advantage of edges like extreme sell-offs when they occur in the marketplace.
^EEB^
Many traders look at price charts of stocks and ETFs and wonder what it would it take in order to know when to step in during a market sell-off, when panic is high and the news seems to be only getting from bad to worse. For many short term traders, tools like ETF PowerRatings are part of the solution to knowing when to step on the long side of the market while the rest of the trading world is panicked, confused and doubtful.
To learn more about trading ETFs using quantified short term trading strategies, click here to launch your free, 7-day trial to our ETF PowerRatings.
David Penn is Editor in Chief at TradingMarkets.com.