Nasdaq Trading Strategies: 3 ETFs for Swing Traders

Stocks are off to a soft start on Turnaround Tuesday, though they are up from their pre-market lows.

As I wrote in a recent Short Term PowerRatings article (“Swing Trading the Good, the Bad and the Ugly”), we have 25 stocks in our Top 25 PowerRatings stocks roster and every single one of them has a Short Term PowerRating of 8. Unfortunately, 15 of those stocks are untradeable to the long side because, based on our swing trading discipline, they are trading below their 200-day moving averages.

The other 10 names in our Top 25 PowerRatings stocks? All inverse (or short) exchange-traded funds.

ProShares Ultra QQQ
(
QLD |
Quote |
Chart |
News |
PowerRating)
Short Term PowerRatings 3. RSI(2): 74.53

QLD Chart

Over the next several weeks we will be rolling out more information on how swing traders who use Short Term PowerRatings can trade exchange-traded funds. ETF trading — as opposed to ETF investing — is truly in its infancy and we are confident that ETF trading will provide swing traders with compelling options to add to their trading of stocks. If you have followed our new column, 7 ETFs You Need to Know for Today, then you already are seeing some of the opportunities to buy oversold ETFs and sell overbought ETFs that appear in the market almost every day.

ProShares UltraShort QQQ
(
QID |
Quote |
Chart |
News |
PowerRating)
Short Term PowerRating 8. RSI(2): 27.00

QID Chart

For now, swing traders can use our Short Term PowerRatings as a guide to when various exchange-traded funds are increasingly attractive as potential longs. And since Tuesday is Nasdaq trading day around here, I wanted to highlight three exchange-traded funds that give swing traders the opportunity to take advantage of oversold and overbought conditions in Nasdaq stocks — Nasdaq 100 stock, in particular — overall.

ProShares Short QQQ
(
PSQ |
Quote |
Chart |
News |
PowerRating)
Short Term PowerRating 8. RSI(2): 20.84

PSQ Chart

As with Short Term PowerRatings with stocks, swing traders should look to buy high Short Term PowerRatings ETFs after they have pulled back and their 2-period RSIs drop. Those ETFs with low Short Term PowerRatings should be among those that swing traders consider for short sales, especially when those low Short Term PowerRating ETFs have high 2-period RSIs.

Does your stock trading need a tune-up? Our highest Short Term PowerRatings stocks have outperformed the average stock by a margin of nearly 17 to 1 after five days.

Click here to start your free, 7-day trial to our Short Term PowerRatings!

Whether you have a trading strategy of your own that could use a boost or are looking for a way to tell the stocks that will move higher in the short term from the stocks that are more likely to disappoint, our Short Term PowerRatings are based on more than a decade of quantified, backtested simulated stock trades involving millions of stocks between 1995 and 2007. Click the link above or call us at 888-484-8220, extension 1, and start your free trial today.

David Penn is Editor in Chief at TradingMarkets.com.