Ultimate PowerRatings Trading Report: Edges In Inverse, Bear Leveraged ETFs

A few days ago I noted that many of the biggest edges for trades using PowerRatings are to be found among leveraged exchange-traded funds (especially inverse leveraged exchange-traded funds). If you missed that column, click here to read “Ultimate PowerRatings Trading Report: Upgrades in Leveraged World Funds.”

Two days later, the edges in top-rated Leveraged ETFs have only increased in many instances. Continued strength in the broader market has meant lower and lower levels for a growing number of exchange-traded funds that track the opposite or inverse of the underlying index. And as these leveraged, inverse ETFs have pulled back to levels from which they have historically advanced, we see continued upgrades and continued high Leveraged ETF PowerRatings in many areas.

Among these top rated funds for the next few days is the ^EDZ^ (below).

EDZ Chart

EDZ has closed with a top Leveraged ETF PowerRating of 10 for the past two consecutive trading days – and has been trading below its 5-day moving average for the past several days, as well. The past few days have been the first time in several months that this ETF has earned such a high Leveraged ETF PowerRating. The last time EDZ earned a top PowerRating (an 8 on May 27) the fund was higher by more than 10% five days later.

Another exchange-traded fund in this category for traders to consider is the ^EEV^.

Inverse leveraged ETFs representing a single country like China have earned top Leveraged ETF PowerRatings late in the trading week. The ^FXP^ (below) has also closed with Leveraged ETF PowerRatings of 10 for the past two trading days.

FXP Chart

FXP has earned steady Leveraged ETF PowerRatings upgrades since June 10, as the broader markets continued to move higher in recent days. As with EDZ, additional strength in the broader market likely will continue to make inverse leveraged ETFs all the more likely to a reversal.

While country funds are rightfully getting much of the attention as far as top Leveraged ETF PowerRatings funds goes, there are also some commodity funds that are earning significant upgrades, as well.

DTO Chart

Chief among these is the ^DTO^ (above).

DTO was just upgraded to a 10 as of Wednesday’s close and, like the other ETFs in today’s report, has seen relatively steady upticks in its PowerRatings over the past few days.

Remember that compared to country funds, commodity ETFs can become and remain more overbought or oversold for extended periods of time. This is another reason why it can be a good idea to hold out for the highest possible PowerRatings – and the greatest edges – when looking to find the best exchange-traded funds to every day.

Isn’t it time you gave ETF PowerRatings a try? Our top-rated ETFs have been correct nearly 80% of the time since 2003. Click here to launch your free, 7-day trial to our ETF PowerRatings today!

David Penn is Editor in Chief at TradingMarkets.com.