High Probability ETF Trading: 7 ETFs You Need to Know for Tuesday (GDX, XME, DGP, FXI, EWH, IBB, XLV)

Buyers remain on the offensive in the metals and materials space, while exchange-traded funds representing markets in Asia are among the few ETFs trading in or near oversold territory above the 200-day moving average.

Here are 7 ETFs You Need to Know for Tuesday.

With the bull market in metals and mining in full swing, it is no surprise that exchange-traded funds representing gold and the market for gold stocks have become some of the more overbought funds in the market in the short term. This includes everything from leveraged direct plays on gold through the  ^DGP^ to funds representing gold mining stocks like the ^GDX^ (below).

GDX chart

Shares of GDX have closed higher for six consecutive trading days heading into Tuesday’s open, and were up more than 1% on Monday.

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Also up for six days in a row were shares of the ^XME^.

Among country-based exchange-traded funds, the most oversold are those with exposure to Asia in general and China in particular. Pulling back into oversold territory going into trading on Tuesday were both the ^EWH^ and the ^FXI^ (below).

FXI chart

Monday marked the second lower close for FXI, which is pulling back after an oversold bounce above the 200-day.

Many high probability traders are wary of trading biotech stocks on pullback (Larry Connors shies away, but Cesar Alvarez, co-author of High Probability ETF Trading, notes that biotech funds are in the data just like other ETFs). But there’s no doubt that the ^IBB^ (below) has begun to pullback toward oversold territory above the 200-day.

IBB chart

IBB was last in oversold territory a week ago, shortly before gaining more than 2% over the next three days.

After gaining for three days in a row, the ^XLV^ pulled back to neutral territory above the 200-day moving average. Additional selling in this ETF could provide an opportunity for traders to begin scaling in to the fund later in the week.

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