Pullbacks in the QQQ, Tech, as Buyers Pile into Small Caps: 7 ETFs You Need to Know for Wednesday

The markets have become somewhat divided, with the S&P 500 still trading in overbought territory and the Nasdaq 100 pulling back into oversold territory. At the same time, as noted below, small cap stocks continue to be a major attraction for traders, with at least three small cap based funds trading in overbought territory above the 200-day.

Here are 7 ETFs You Need to Know for Wednesday.

Among the few exchange-traded funds (ETFs) trading in oversold territory heading into trading on Wednesday are a number of funds related to the Nasdaq 100.

Pulling back for a second day to close in oversold territory, for example, are both the ^QQQ^ and the ^QLD^ (below).

QLD chart

Closing in overbought territory for four day in a row before the recent, two-day pullback, the QLD is trading at its most oversold levels in more than two weeks.

Whether you opt for the full power of The Machine or the streamlined efficiency and ease of use of The Machine Lite, there may be no better resource for independent traders looking to manage and grow their money like a top tier professional. To learn how to make The Machine a part of your strategy for trading and investing, click here now to learn more about the next free online seminar by Larry Connors, Building a Balanced High Performing Portfolio.

Looking at country and regional funds, the ^VPL^ has retreated to oversold territory just a few cents above its 200-day moving average. VPL represents equity markets from countries around the Pacific Rim such as Japan, Australia, and Hong Kong.

The ^XLK^ (below) has closed lower for four days in a row heading into Wednesday’s market.

XLK chart

XLK’s last two closes have been in oversold territory above the 200-day.

After closing lower for four days in a row, shares of the ^USD^ rallied by more than 3% in Tuesday’s trading. The move higher in USD was typical of Tuesday’s oversold bounces in semiconductor stocks and exchange-traded funds.

Many of the most overbought exchange-traded funds heading into trading on Wednesday represent the market for small cap stocks. This includes ETFs like the ^IWM^, as well as the ^VBK^ (below).

VBK chart

Shares of VBK have closed higher for six consecutive trading days, all six in overbought territory above the 200-day.

Find out why more and more short term traders are turning to exchange-traded funds (ETFs). High Probability ETF Trading by Larry Connors and Cesar Alvarez provides traders with 7 professional strategies to improve their ETF trading. Click here to learn more.

David Penn is Editor in Chief of TradingMarkets.com