In yesterday’s Daily ETF Analysis column ( “Tumbling Tech? Top Sector Opportunities for High Probability Traders,” I noted that while technology ETFs had begun to pullback, semiconductor funds had remained relatively resilient.
Unsurprisingly, as technology continued to pull back on Thursday, semiconductor ETFs – including both of those mentioned yesterday – enjoined the broader pullback in technology.
As you can see in the chart of the ^SMH^ above, semiconductor ETFs have slipped from their highs and begun to move lower into territory above the 200-day moving average. The same is true for the ^USD^ (below):
The SMH and USD have both closed lower now for three days in a row. This, combined with the newly oversold conditions in both funds, makes both of these sectors – technology in general and semiconductors in specific – very much worth watching by high probability traders in general and ETF PowerRatings traders in specific over the next few days.
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Revisiting some earlier Daily ETF Analysis commentary on the REIT and real-estate related exchange-traded funds (“Overbought and Rising: How High Probability Traders Trade Runaway Markets,”) there was significant strength in ETFs like the ^VNQ^ (below) and the ^RWR^. Both funds, which were featured in our Daily ETF Analysis commentary back on Wednesday, since have rallied to close in overbought territory – as well as closing above their 5-period moving averages.
One more note: a number of country funds – from the ^FXI^ to the ^EWZ^ – began to pull back in earnest on Thursday. Further selling over the next day or two may help create some high probability trading opportunities in country ETFs like these by early next week.
David Penn is Editor in Chief at TradingMarkets.com.