Looking for exchange-traded funds (ETFs) that are likely to make significant moves higher in the near term? Keep an eye on our ETF PowerRatings 5 ETF funds for the next 5 days.
Our research into short term price behavior in exchange-traded funds – going back to 2003 – shows that ETFs that have earned our highest ETF PowerRating of 10 have made significant short term gains nearly 80% of the time. Even those ETF funds that earned ETF PowerRatings of 8 and 9 made significant short term gains more than 75% of the time.
Click here to see one of a number of recent ETF PowerRatings funds in action as it rallied from oversold lows back into strength earlier this week.
Thursday's sell-off sent a number of ETFs back toward or into oversold territory above the 200-day moving average. This pullback also meant that there were more than a few ETF PowerRatings upgrades earned ahead of trading on Friday. Here in this report, we'll take a quick look at some of the higher rated funds for traders looking for potential short term opportunities over the next few days.
The two ETFs that traders should perhaps pay the most attention to are the 9-rated Financial Select Sector SPDR Fund (XLF) and the iShares MSCI Emerging Markets Index Fund (EEM).
The Financial Select Sector SPDR Fund (XLF) (below) closed lower for a second consecutive session on Thursday, bringing the fund closer to its 200-day moving average than it has been in several weeks. XLF has a 2-period RSI of less than 10.
Also making significant new short-to-intermediate term lows is the iShares MSCI Emerging Markets Index Fund (EEM) (below). This ETF has also closed lower for the past two consecutive trading days, earning an exceptionally low 2-period RSI of less than 10.
The three other ETFs of note all have ETF PowerRatings of 8. These funds are the iShares Russell 2000 Index Fund (IWM), which has closed lower for four out of the past six trading days, the iShares MSCI Brazil Index Fund (EWZ), which has a 2-period RSI of approximately 12 and came perilously close to its 200-day moving average on Thursday, and the iShares MSCI EAFE Index Fund (EFA), which has mimicked the EWZ in retreating toward its 200-day moving average late in the week.
David Penn is Editor in Chief at TradingMarkets.com.
