Ultimate PowerRatings Trading Report: Opportunities in Health Care and Financials
Before taking a look at the opportunities created by new volatility in the technology sector, I want to review the performance of one of the stocks mentioned in the last Ultimate PowerRatings Trading Report: ^SHLD^.
SHLD was noted in Friday’s report (“Ultimate PowerRatings Trading Report: Opportunities in Gold and Health Care”). At the time, the stock had closed in oversold territory for the previous two days.
Four days later, the oversold stock had rallied by well over 3%.
Looking forward, PowerRatings traders will have to deal with continued overbought conditions above the 200-day moving average. Although these conditions have reduced the number of top PowerRatings stocks and ETFs, there are still potential opportunities for patient, disciplined traders to be aware of.
Stocks:
From a sector perspective, some of the biggest pullbacks in the market are health care or pharmaceutical related. This is very evident when it comes to exchange-traded funds, but it is no less apparent on careful review of the few top rated PowerRatings stocks for Thursday.
An example of these potential opportunities is in ^ANDS^.
ANDS has been pulling back over the past few days, closing in oversold territory on Wednesday. The stock is experiencing profit-taking from the rally that helped bring it up above its 200-day moving average back in mid-March.
One non-medical stock that has earned top Stock PowerRatings ahead of trading on Thursday is ^OEH^.
OEH actually bounced back up from its most oversold levels from Tuesday, but still represents a potential short term trading opportunity – especially if the stock reverses lower over the next few days.
Exchange-traded Funds (ETFs):
I mentioned above that health care and pharmaceutical ETFs are among the most oversold by sector. This includes ETFs like the ^XLV^ and the ^PPH^.
But continued overbought conditions also mean that there are a small but growing number of exchange-traded funds that have earned exceptionally low Stock PowerRatings. These ETFs, such as the ^EWP^ (below), are overbought below the 200-day moving average and increasingly vulnerable to reversal.
Leveraged ETFs:
Strength in financial and technology is reflected nowhere as powerfully as it is in the extreme oversold conditions and high leveraged ETF PowerRatings of inverse leveraged ETFs like the ^FAZ^ (below) and the ^TYP^.
FAZ in particular plunged to new short term lows on Wednesday, dropping to truly extreme oversold territory. As such it is no surprise that FAZ (and TYP) take our highest leveraged ETF PowerRatings into Thursday’s trading.
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David Penn is Editor in Chief at TradingMarkets.com.