Location, Location: ETF Strategies for Trading REIT, Homebuilder ETFs
With the pre-market futures hinting at a strong open to end the week on Friday, short term traders have a number of high ETF PowerRatings ETFs that have pulled back in recent days to choose from.
Over the past few days, I have highlighted potential opportunities in country ETFs and commodity ETFs. Today, we will look at a set of exchange-traded funds that represent specific sectors, namely, REITs and homebuilders.
All of the exchange-traded funds in today’s report have ETF PowerRatings of 8 or 9. Our highest ETF PowerRatings funds, those with ETF PowerRatings of 10, have made significant short term gains nearly 80% of the time. Even those funds with ETF PowerRatings of 8 and 9 have made similar gains in the short term more than 75% of the time.
Click here to learn more about trading with ETF PowerRatings.
First, let’s take a look at the Dow Jones Wilshire REIT ETF
(
RWR |
Quote |
Chart |
News |
PowerRating) (below).
RWR has closed lower for three out of the past four days, with Thursday’s close being the first in oversold territory since late November. The ETF has a 2-period RSI of just above 20 and an ETF PowerRating of 8.
Another exchange-traded fund representing real estate investment trusts or REITs, is the Vanguard REIT ETF
(
VNQ |
Quote |
Chart |
News |
PowerRating) (below). Like RWR, VNQ also has an ETF PowerRating of 8.
VNQ also has closed lower for three out of the past four days (four out of the past six), culminating in a 2-period RSI of less than 20. With an ETF PowerRating of 8, VNQ is among a number of REIT ETFs that short term traders will be keeping an eye on over the next few days.
The last ETF in today’s report tracks not real estate investment trusts, but the fortunes of homebuilder stocks.
With an ETF PowerRating of 9, the S&P Homebuilders SPDR ETF
(
XHB |
Quote |
Chart |
News |
PowerRating) is the highest rated ETF in today’s survey. As with VNQ, XHB has closed lower for four out of the past six trading days, earning a 2-period RSI of just above 15.
Even though we are likely to see strength — at least early — in the markets today on Friday, as long as these funds continue to display high ETF PowerRatings of 8 or higher, they remain potentially attractive candidates for short term trades. Traders should consult our ETF PowerRatings page on an intraday basis to see if there has been any meaningful upgrade or downgrade to these funds before taking positions.
David Penn is Editor in Chief at TradingMarkets.com.