Ultimate PowerRatings Report: Opportunities in Europe, Pacific and Publishing

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With U.S. markets largely overbought, many of the best opportunities will be found in high rated country ETFs. At the same time, traders should be alert to the potential of profit-taking, which could result in sudden and significant moves lower and – in all likelihood – an increase in the number of top PowerRatings stocks, exchange-traded funds and leveraged ETFs over the balance of the week.


Going into trading on Monday, there are a few stocks with Stock PowerRatings of 9 or 10 that PowerRatings traders may want to keep an eye on over the next few days. Among these stocks is technology company, ^FNSR^ and publisher, ^MNI^ (below).

MNI Chart

The McClatchy Company plunged over the past two days, dropping from a lowest possible “1” PowerRatings to a 9 in two trading sessions. The close results is the lowest closing low for MNI since mid-month.

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Exchange-Traded Funds (ETFs):

The number of top-rated exchange-traded funds for Monday is relatively modest, given the market’s continued strength. Fortunately, those ETFs that did earn top ETF PowerRatings of 8, 9 or 10 as of the Friday’s close include a majority of country-based funds. These include the ^EWA^ (mentioned in Friday’s High Probability Trading Report), and the ^BKF^ (below).

BKF Chart

The iShares MSCI BRIC Index Fund ETF has maintained its top ETF PowerRatings for the past six days as it has traded in a range at historically low levels. The fund includes stocks from countries that are part of the so-called BRIC group of nations: Brazil, Russia, India and China.

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Leveraged ETFs:

Traders looking toward the short side of the market may find worthwhile opportunities in leveraged ETFs as the week begins. Although the ranks of top-rated leveraged funds is not especially numerous, there are a few ETFs that traders should keep on their watchlists should they continue to rally into territory from which they have historically sold-off.

These are leveraged ETFs that have earned especially low, leveraged ETF PowerRatings. Remember that funds that earn low PowerRatings of 2 or 1 are as likely to move lower, based on our testing, as funds that have high PowerRatings of 9 or 10 are to move higher. This makes low rated funds potentially attractive to short term traders looking to sell markets short.

ERX Chart

For today, PowerRatings traders should look at ETFs like the ^ERX^ (above). The fund broke out to a new short term high on Friday and continued buying in this fund could easily result in a downgrade to our lowest leveraged ETF PowerRatings of 1.

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David Penn is Editor in Chief at TradingMarkets.com.