• Free Book
  • Store
    • Books
    • Free First Chapters
    • Free Newsletters
  • Recent Articles

TradingMarkets.com

Quantified Stock Market Trading Strategies & Systems

  • Home
  • New Trading Research
  • Education
    • Articles
      • Connors Research
      • ETFs
      • Options
      • Stocks
      • Volatility
    • Trading Lessons
    • Connors Research
    • Glossary
    • Interview Archive
    • Videos
  • Python
  • Quantamentals
    • Quantamentals: The Next Great Forefront of Trading and Investing
    • Quantamentals Resources
  • Courses
  • Store
    • New Book! The Alpha Formula
    • “Buy The Fear, Sell The Greed” – Best Seller!
    • Swing Trading College 2019
    • Trading Books and Guidebooks
    • Street Smarts
    • Online Trading Courses
    • Private Mentoring with Larry Connors
    • Customized Trading Research
    • Amibroker Strategy Add On Modules
You are here: Home / ETFs / Commentary / Most Overbought and Oversold ETFs: Materials Rally to Overbought Extremes

Most Overbought and Oversold ETFs: Materials Rally to Overbought Extremes

July 22, 2010 by David Penn

Taking a look at the most overbought and oversold ETFs with just a few minutes left before the close on Thursday, there are precious few exchange-traded funds (ETFs) trading in oversold territory
above the 200-day moving average.

But looking at the other side of the high probability trading equation – the “sell the buying” side – reveals not just a number of ETFs (leveraged and non-leveraged) that have become overbought
below the 200-day moving average, but an entire sector that may have moved too far too fast to the upside and become vulnerable to short term reversal.

The Bounce in Basic Materials

Of the few funds that are overbought below the 200-day moving average, the number of ETFs that are related to basic or industrial materials is eye-catching.

The ^SLX^ is among the most overbought ETFs in the market, earning a 2-period RSI of more than 90 along with the ^IYM^, the ^UYM^ and the ^XME^ (below).

XME Chart

Country Funds Ready to Fall Back?

While basic materials are the sector that should probably attract the most attention from high probability traders, exchange-traded funds linked to countries like Russia and the United Kingdom are
also becoming overbought below the 200-day moving average.

Examples of these overbought country funds included representatives of the BRIC economies of Brazil, Russia, India and China in the form of the ^RSX^ and the ^EWZ^, both of which gained more than 3% on Thursday. As for the ^EWU^, the fund was back in overbought territory below the 200-day
moving average after a Thursday rally of well over 2%.

EWZ Chart

Oversold ETFs: Only the Lonely

Based on our research, there are only two exchange-traded funds that are oversold above the 200-day moving average that may be of interest to high probability traders. Those two funds are the
^DUG^ and the ^UUP^ (below). The reversal in UUP has been especially sharp, with the ETF moving from overbought territory to oversold territory in two sessions.

UUP Chart

With Larry Connors’ High Probability ETF Trading Software, short term traders have access to the same kind of “buy the selling, sell the buying” trading strategies that professional traders have used successfully for decades.

Click here to start your free trial to Larry Connors’ High Probability ETF Trading Software today!

David Penn is Editor in Chief at TradingMarkets.com.

Filed Under: Commentary, Recent Tagged With: etf funds, High Probability ETF Trading, Most Overbought and Oversold ETFs, trading ETFs

Buy The Fear, Sell The Greed

Buy The Fear, Sell The Greed

Swing Trading College

New Book From Larry Connors and Chris Cain, CMT – "The Alpha Formula; High Powered Strategies to Beat The Market With Less Risk"

We’re excited to announce the release of a new investment book written by Larry Connors and Chris Cain, CMT. The book, “The Alpha Formula; High Powered Strategies to Beat The Market With Less Risk “ combines… Hedge fund legend Ray Dalio’s brilliant insight into combining uncorrelated strategies… With new, minimally correlated, quantified, systematic strategies to trade… [Read More]

Buy The Alpha Formula Now

Connors Research Traders Journal (Volume 57): 7 Real-World Reasons Why Short Strategies Should Be Included In Your Portfolio

In our new book, The Alpha Formula – High Powered Strategies to Beat the Market with Less Risk, we show the benefits of including short-strategies in your portfolio. As a reminder, building portfolios should be based on First Principles – otherwise known as truths. These truths are: Markets Go Up Market Go Down Markets Go… [Read More]

Company Info

The Connors Group, Inc.
185 Hudson St., Suite 2500
Jersey City, NJ 07311
www.cg3.com

About Us

About
Careers
Contact Us
Link To Us

Company Resources

Help
Privacy Policy
Return Policy
Terms & Conditions

Properties

TradingMarkets
Connors Research

Connect with TradingMarkets

Contact

info@cg3.com
973-494-7311 ext. 628

Free Book

Short Term Trading Strategies That Work

© Copyright 2020 The Connors Group, Inc.

Copyright © 2023 · News Pro Theme on Genesis Framework · WordPress · Log in