PowerRatings and the Sell-Off in Short ETFs
Days of rising stocks have led to exceptionally oversold conditions in a number of short/inverse exchange-traded funds.
Those who have been following this column for the past several days know that the situation we are beginning to see now: a Top 25 PowerRatings list loaded with short or inverse ETFs with Short Term PowerRatings of 8 or higher.
We are seeing other evidence that the markets are becoming significantly overbought — from consecutive higher highs to 2-period RSIs in the 90s for the S&P 500, Nasdaq Composite and Dow 30. We saw a spike in the number of 1-rated stocks — overbought stocks that are most likely to underperform the average stock in the short term. And while this is not something that we track statistically, we do know that when there are a growing number of our lowest-rated stocks, the chances for a market reversal are good and getting better.
And this means potential opportunity for short term traders who trade high Short Term PowerRating short or inverse ETFs.
Presented here is a variety of short/inverse ETFs that traders might want to keep an eye on over the next few days. Know that the markets are already exceptionally overbought and it might not take much for profit-taking to send stocks reeling — and exchange-traded funds like the ones in this report soaring higher — sooner than we might expect.
Emergent Biosolutions
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PowerRating) Short Term PowerRating 9. RSI(2): 3.14
ProShares UltraShort Russell 2000 ETF
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TWM |
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PowerRating) Short Term PowerRating 8. RSI(2): 5.23
ProShares UltraShort S&P 500 ETF
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PowerRating) Short Term PowerRating 8. RSI(2): 3.88
Rydex 2x Inverse S&P 500 ETF
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PowerRating) Short Term PowerRating 8. RSI(2): 4.09
DeVry Inc.
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DV |
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PowerRating) Short Term PowerRating 8. RSI(2): 3.86
I have also included a pair of stocks that are among the few that are still in pullback mode as the rest of the market rallies higher. These two 8-rated stocks are ones that those traders still looking for long exposure can still find at value prices.
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