ConnorsRSI readings below 5 are relatively rare and the performance of stocks that become this oversold has been strong, on average, over the next five trading days. Heading into Wednesday’s trading two ETFs have become this oversold. Eleven other ETFs have ConnorsRSI ratings below 10.
Each of these ETFs is trading above its 200-day moving average. The 2-period RSI confirms each of these ETFs is oversold as does Bollinger Bands® (%b). They are also set up as potential buys under the RSI25 strategy detailed in the book High Probability ETF Trading: 7 Professional Strategies to Improve Your ETF Trading. In back-testing on 20 of the most liquid ETFs for as long as the ETF had been traded, a period of up to 15 years, 77% of 786 buy signals with this strategy were winners, delivering an average gain of 1.06% with an average holding period of just over six days. These trades are entered when the 4-period RSI (RSI4) is under 25 and closed when the 4-period RSI closed above 55.
Now let’s look at the most overbought and oversold stocks (according to ConnorsRSI) heading into trading for September 10, 2014. ConnorsRSI is a proprietary and quantified momentum oscillator developed by Connors Research that indicates the level to which a security is overbought (high values) or oversold (low values).
CNSI (Comverse) is the most oversold stock with a ConnorsRSI reading of 1.49.
JNK (SPDR Barclays High Yield Bond ETF) is the most oversold non-leveraged ETF with a ConnorsRSI reading of 2.31.
UST (Proshares Ultra 7-10 Year Treasury) is the most oversold leveraged ETF with a ConnorsRSI reading of 10.59.
CUDA (Barracuda Networks) is the most overbought stock with a ConnorsRSI reading of 97.95.
UNG (US Natural Gas) is the most overbought ETF with a ConnorsRSI reading of 85.39. This is the second day in a row IFN has been the most oversold ETF.
TradingMarkets Lists provide users pre-populated lists of stocks and ETFs identifying symbols with overbought and oversold ConnorsRSI and Bollinger Bands® readings. The Screener Lists are powered by The TradingMarkets Screener.
All data is as of the end of day on 9/9/2014.