Ultimate PowerRatings Trading Report: Energies Up and an Outlook on Homebuilding
With stock and ETF markets closed today on Friday, today might be a good day to review the progress of some of the stocks and ETFs we discussed earlier in the week. We’ll also briefly look ahead to potential opportunities when trading begins on Monday.
Early this week, I highlighted a pair of stocks, a pair of exchange-traded funds (ETFs) and a leveraged ETF. Of the five markets mentioned, four have advanced since Monday’s mention.
The most impressive gains clearly were in the ^ERX^.
ERX opened Monday morning at 37.01. Three days later, the leveraged ETF had closed higher by more than 10%.
At midweek, the biggest pullbacks were increasingly concentrated in the financials, both in terms of stocks and exchange-traded funds. Here, the gains have been more modest. But both the ^IAT^ and the ^RKH^, for example, have climbed from Wednesday’s opening prices.
Up nearly 1% however, after being listed in Wednesday’s report was a non-financial: ^RAIL^.
Going forward and looking to Monday’s trading, the same newly overbought conditions that have helped the stocks and ETFs above reach profit-taking levels mean that new pullbacks are relatively few. One place high probability traders can look is in the real estate area, specifically home construction in the form of the ^ITB^.
ITB has closed in oversold territory above the 200-day moving average for the past two consecutive trading days. The fund is one of two, top-rated exchange-traded funds for Monday.
Most of the leveraged ETFs earning PowerRatings of 8 or higher for Monday are commodity-related. This includes two 9-rated leveraged ETFs: the ^ZSL^ and the inverse of the leveraged energy ETF mentioned above, the ^ERY^. Thursday’s thrust higher helped push these and other leveraged ETFs into oversold territory. Continued strength early next week will likely create even more oversold opportunities in the leveraged inverse ETF market.
David Penn is Editor in Chief at TradingMarkets.com.