Whether you trade stocks, exchange-traded funds (ETFs) or leveraged ETFs, the big sell-off in Tuesday's trading means the number of markets earning top Stock, ETF and Leveraged ETF PowerRatings is soaring going into the second half of the trading week.
By the close on Tuesday, the SPDR S&P 500 ETF (SPY) was off more than 2%. The ProShares Ultra Financials (UYG) had shed well over 5%. And the Direxion Technology Bull 3X Shares (TYH) closed after pulling back by more than 9%.
Where should traders focus over the next few days? Our PowerRatings system rates stocks, exchange-traded funds, and leveraged ETFs on a scale of 1 to 10. The highest rated stocks and ETFs, those that earn PowerRatings of 9 or 10, have made significant short term gains as much as 79% of the time according to our quantified backtests involving thousands of simulated trades in stocks and ETFs. This research extends as far back as 1995 in the case of stocks.
Let's take a look at some of the markets – in stocks, ETFs and leveraged ETFs – that have begun to pullback to levels from which, based on our testing, they have historically made significant short term gains.
Stocks:
Among the stocks earning major Stock PowerRatings upgrades as of Tuesday's close are widely-known names such as Eastman Kodak Co (EK) and Hertz Global Holdings Inc (HTZ). Earning a top Stock PowerRating late in trading on Tuesday was US Steel Corp (X) (below), a stock that hasn't closed above its 5-day moving average in nearly a month.
Remember that when trading stocks using Stock PowerRatings, one excellent way to potentially increase your gains is to buy using a strategy Larry Connors calls "intraday weakness." To learn more about trading Stock PowerRatings stocks using "intraday weakness," click here.
Exchange-Traded Funds (ETFs):
For traders looking to the ETF market for potential short term trades, country funds in both Europe and Asia continue to rank among the highest rated funds over the next few days. This includes ETFs like the iShares MSCI UK Index Fund (EWU) and the iShares MSCI Hong Kong Index Fund (EWH), as well as regional exchange-traded funds like the iShares MSCI BRIC Index Fund (BKF) (below), which includes stocks from Brazil, Russia, India and China.
Find out more about what ETF PowerRatings can do for you and your trading. Click here to launch your free, 7-day trial to our ETF PowerRatings today.
Leveraged ETFs:
With markets becoming extremely oversold on Tuesday, it is little surprise to see leveraged ETFs like the ProShares Ultra Semiconductors (USD) and the ProShares Ultra Basic Materials (UYM) earning top Leveraged ETF PowerRatings ahead of trading on Wednesday. Also among this group of top-rated funds is the Direxion Technology Bull 3X Shares (TYH) (below)
Scaling-in to positions as markets become increasingly oversold is a high probability trading strategy for trading not just regular, non-leveraged ETFs, but for trading leveraged exchange-traded funds, as well. To learn more about strategies to potentially improve your gains trading leveraged ETFs, click here to download our free report: 3 Ways to Increase Your Gains Trading Leveraged ETF PowerRatings.
David Penn is Editor in Chief at TradingMarkets.com.
