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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 NameSymbol
FIRST TR CONSUMR STAPLS ALPHADEX ETFFXG
FIRST TRUST NASDAQ CLEAN EDGE ETFGRID
GLOBAL X FTSE ASEAN 40 ETFASEA
GUGGENHEIM S&P 500 EQUAL WE CONS ETFRHS
ISHARE DJ US CONSUMER GOODS INDX ETFIYK
ISHARES HIGH DIVIDEND EQUITY ETFHDV
ISHARES MSCI ALL CO WRLD MIN VOL ETFACWV
ISHARES MSCI EAFE MINIMUM VOLAT ETFEFAV
ISHARES MSCI USA MINIMUM VOLATIL ETFUSMV
ISHARES S&P GBL CONSU STPLS SCTR ETFKXI
POWERSHARES DYN FOOD&BEVERAGE ETFPBJ
POWERSHARES HIGH YIELD DIVIDEND ETFPEY
POWERSHARES S&P 500 LOW VOLAT ETFSPLV
POWERSHARES S&P INTERNATIONAL DE ETFIDLV
PWSHS FTSE RAFI ASIA PCFC EX JPN ETFPAF
SCHWAB US DIVIDEND EQUITY ETFSCHD
SPDR FUND CONSUMER STAPLES ETFXLP
SPDR S&P INTL CONSMR STAPLES SEC ETFIPS
VANGUARD CONSUMER STAPLES ETFVDC
VANGUARD HIGH DIVIDEND YIELD ETFVYM
WISDOMTREE EQUITY INCOME ETFDHS

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):

(click to enlarge)

(click to enlarge)

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:

VYMDHSSPY
Consumer Discretionary6.104.0311.48
Consumer Stapes19.3015.6610.93
Energy13.108.8511.12
Basic Materials4.203.633.43
Industrials12.604.1310.24
Info Tech7.9010.9518.28
Telecomm5.3011.982.98
Healthcare12.9015.1612.25
Utilities8.0013.243.41
Financials10.6012.1815.86

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.

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