The most oversold exchange-traded funds trading above the 200-day moving average are both high yield corporate bond ETFs: the iShares IBoxx High Yield Corporate Bond ETF (NYSE: HYG) and the SPDR Lehman High Yield Bond ETF (NYSE: JNK).
JNK has closed lower for five days in a row, with the last six sessions finishing in technically oversold territory. Oversold conditions in HYG are even more extreme. The iShares IBoxx High Yield Corporate Bond ETF has sold off for seven consecutive trading days, trading oversold on the most recent five.
So it is no surprise to find these ETFs at the top of our Most Oversold ETFs list ahead of Monday’s trading. And compared to the four-day pullbacks at the beginning of March that took both high yield ETFs sharply lower and into short-term oversold territory – pullbacks that resulted in the strongest rallies in both funds since January – JNK and HYG are more oversold now than they were then.
As of Thursday’s close, shares of both JNK and HYG have positive, short-term edges of one and a third percent.
Moving up from the high yield section of corporate debt, we see strength in the iShares IBoxx Investop Corporate Bond ETF (NYSE: LQD), which has closed higher for two days in a row after a three-day pullback took LQD into oversold territory in the first half of the week.
Other interesting sources of short-term weakness in bond ETFs include the pullback in the iShares JP Morgan USD Emerging Markets Bond Fund ETF (NYSE: EMB). Trading above its 200-day moving average since the second half of January, EMB has dropped for the past three days in a row – all in technically oversold territory – and earned a positive edge of more than half a percent. The ETF has been trading lower ever since rallying to new, 52-week highs in mid-March.
Lastly, note that while a number of major bond ETFs such as the Vanguard Total Bond Market ETF (NYSE: BND) and the iShares Barclays Aggregate Bond Fund (NYSE: AGG) have rallied over the past two days, the bond ETF that is the most short-term overbought is actually the iShares Barclays 20+ Year Treasury Bond Fund (NYSE: TLT). Up three-quarters of a percent on Thursday, TLT is back above its 200-day moving average after finishing in technically overbought territory.
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David Penn is Editor in Chief of TradingMarkets.com