ETFs With Best Price Chart Condition: Yield And Low Volatility Prevail

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Includes: DHS, HDV, SPLV, SPY, USMV, VYM, XLP
by: Richard Shaw

Of the 1,306 ETFs in the Reuters database, there are 21 with very strong up trend chart patterns and good liquidity for execution.

However, on visual inspection, which can see far more detail than any computer screen you are likely to use, we found only 10 that avoid unappealing moves between the computer filter test criteria, and that generally beat the S&P 500.

The names are highly concentrated in defensive stocks with a particular emphasis on low volatility and above average yield.

Most of those 10 ETFs have higher P/E ratios and lower long-term forward earnings growth rate expectations than the S&P 500, suggesting the defensive and yield stocks may be getting a bit ahead of themselves.

Here are the ETFs:

Instrument Name Symbol
FIRST TR CONSUMR STAPLS ALPHADEX ETF FXG
FIRST TRUST NASDAQ CLEAN EDGE ETF GRID
GLOBAL X FTSE ASEAN 40 ETF ASEA
GUGGENHEIM S&P 500 EQUAL WE CONS ETF RHS
ISHARE DJ US CONSUMER GOODS INDX ETF IYK
ISHARES HIGH DIVIDEND EQUITY ETF HDV
ISHARES MSCI ALL CO WRLD MIN VOL ETF ACWV
ISHARES MSCI EAFE MINIMUM VOLAT ETF EFAV
ISHARES MSCI USA MINIMUM VOLATIL ETF USMV
ISHARES S&P GBL CONSU STPLS SCTR ETF KXI
POWERSHARES DYN FOOD&BEVERAGE ETF PBJ
POWERSHARES HIGH YIELD DIVIDEND ETF PEY
POWERSHARES S&P 500 LOW VOLAT ETF SPLV
POWERSHARES S&P INTERNATIONAL DE ETF IDLV
PWSHS FTSE RAFI ASIA PCFC EX JPN ETF PAF
SCHWAB US DIVIDEND EQUITY ETF SCHD
SPDR FUND CONSUMER STAPLES ETF XLP
SPDR S&P INTL CONSMR STAPLES SEC ETF IPS
VANGUARD CONSUMER STAPLES ETF VDC
VANGUARD HIGH DIVIDEND YIELD ETF VYM
WISDOMTREE EQUITY INCOME ETF DHS
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Here are the filter criteria:

  • Price > 21-day average
  • 21-day average > 63-day average
  • 63-day average > 126-day average
  • 126-day average > 252-day average
  • 200-day average > its value 10 days ago
  • 252-day linear regression slope is positive
  • 126-day linear regression slope is positive
  • 63-day linear regression slope is positive
  • 21-day linear regression slope is positive
  • Price above 252-day linear regression trend line
  • Price above 126-day linear regression trend line
  • Price above 63-day linear regression trend line
  • Price above 21-day linear regression trend line
  • Price within 5% of its 252-day high
  • per minute dollar trading volume at least $25,000.

The 10 ETFs that looked OK when reviewed by eye:

Trailing yield and P/E and 5-year growth estimates are listed after each symbol.

  • RHS (2.25%, 16, 9.37%)
  • USMV (1.97%, 15, 8.79%)
  • KXI (2.60%, 16, 9.21%)
  • SPLV (2.89%, 16, 7.21%)
  • XLP (2.89%, 16, 9.10%)
  • IPS (2.30%, 16, 9.38%)
  • VDC (2.79%, 15, 9.69%)
  • VYM (3.05%, 13, 7.72%)
  • DHS (4.13%, 13, 7.61%)

For comparison, SPY has a trailing yield, P/E and earnings estimate of 2.07%, 14 and 10.65%.

Charts for select 10 ETF versus S&P 500 ETF (NYSEARCA:SPY):

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Sector Comparisons:

In view of the possibility that stocks are a bit extended, and generally wanting lower risk opportunities, we would tend to favor VYM and/or DHS which have higher yields and lower P/E ratios than SPY.

Here are the sector weights for those three ETFs:

VYM DHS SPY
Consumer Discretionary 6.10 4.03 11.48
Consumer Stapes 19.30 15.66 10.93
Energy 13.10 8.85 11.12
Basic Materials 4.20 3.63 3.43
Industrials 12.60 4.13 10.24
Info Tech 7.90 10.95 18.28
Telecomm 5.30 11.98 2.98
Healthcare 12.90 15.16 12.25
Utilities 8.00 13.24 3.41
Financials 10.60 12.18 15.86
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Disclosure: QVM has positions in VYM as of the creation date of this article (February 25, 2013). We certify that except as cited herein, this is our work product. We received no compensation or other inducement from any party to produce this article, but are compensated retroactively by Seeking Alpha based on readership of this specific article.

General Disclaimer: This article provides opinions and information, but does not contain recommendations or personal investment advice to any specific person for any particular purpose. Do your own research or obtain suitable personal advice. You are responsible for your own investment decisions. This article is presented subject to our full disclaimer found on the QVM site available here.