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For investment horizons out a few months, technical ratings from services such as StockCharts and BarChart can be helpful. It's important to note that technical ratings don't speak about the long-term future.

While technical ratings often are labeled short-term, medium-term and long-term, those labels tend to apply to time frames in the broad vicinity of 1 month, 3 months and 6 months. Unfortunately, words like "long-term" have entirely different meanings for different investors, and certainly many fundamentally oriented investors, as opposed to momentum-oriented investors, would not consider 6 months to be long-term at all.

This technical look at the highest rated ETFs according to StockCharts, with associated BarChart ratings is a direct look at which of them are hot and which are not at this time.

In addition, for investors who prefer individual stocks, the same rankings give valuable insight into which sectors and industries are rated as strong and weak.

The trend of the sector and industry is a powerful force that fundamentally strong individual stocks have a really hard time overcoming if the trend is negative, and from which fundamentally weak stocks tend to get a bit of a free ride.

As the saying goes, "a rising tide raises all boats, and an ebbing tide lowers all boats."

Note: The ETF universe considered excludes inverse and ultra ETFs. Top ranked ETFs had StockCharts scores of >90 out of 100, and bottom ranked ETFs had scores of <10 out of 100. We selected the top 20 from each group by ranking them by the dollar trading volume on the most recent market day. The technical rating criteria for Stock Charts and BarChart are provided at the bottom of the article.

Figure 1: Top 20 ETFs By StockCharts Ranking

Top 20 StockCharts Technical Rating(>90)
SymbolName$ Vol/Min
GDXGold Miners1,787,921
SLVSilver1,175,244
EWWMexico579,358
XHBHomebuilders519,134
XLVHealth Care425,790
UNGNatural Gas335,261
EPIIndia310,415
IBBBiotech295,691
EWGGermany224,870
ITBU.S. Home Construction139,379
EWHHong Kong121,178
KBEMajor Banks94,935
IYZTelecomm89,535
PCYEM Sovereign Debt53,770
PINIndia50,716
PPLTPhysical Platinum45,030
AMJAlerian MLP ETN40,165
REMMortgage REITs36,716
THDThailand32,186
RWXInternational Real Estate30,198

We identified THD as attractive in a prior article about country funds that included capture ratio spreads as one of the evaluation criteria.

Figure 2: BarChart Buy, Sell, Hold For Top 20 ETFs

(click to enlarge)

Figure 3: Bottom 20 ETFs By StockCharts Ranking

Bottom 20 StockCharts Technical Rating (<10)
SymbolCategory$ Vol/Min
EWZBrazil1,946,879
USOOil618,380
XMEMetals & Mining418,376
EWJJapan324,582
OIHOil Services301,696
SMHSemiconductors188,551
EZASouth Africa93,938
FXACurrency - Australian Dollar85,408
UUPUS Dollar Index - Up78,126
OILOil37,726
SOXXSemiconductors33,373
DBOOil19,151
HDGEBear Hedge15,952
KOLCoal9,733
EDIVEmerging Mkt Dividends9,218
JOCoffee ETN8,567
DXJJapan Dividends8,566
SLXSteel8,219
IEZU.S. Oil Equipment & Services7,476
XSDSemiconductors5,674

Figure 4: BarChart Buy, Sell, Hold For Bottom 20 ETFs

(click to enlarge)

Figure 5: Some Additional Top ETFs

These few supplemental country funds didn't make the top 20 due to lower per minute trading volume, but they are interesting enough to be mentioned in a supplemental list.

Supplemental StockCharts Technical Rating(>90)
SymbolName$ Vol/Min
EPHEPhilippines17,330
EGPTEgypt3,417
ENZLNew Zealand2,931
NORWNorway1,354
EIRLIreland736

We identified EPHE as attractive in a prior article about country funds that included capture ratio spreads as one of the evaluation criteria.

Figure 6: BarChart Buy, Sell, Hold For Supplemental Top ETFs

(click to enlarge)

Figure 7: StockCharts Rating Criteria

StockCharts evaluates each stock on these technical criteria and then rank them against members of their peer group.

Link to its description of its method.

Figure 8: BarChart Rating Criteria

Unlike StockCharts, which provides relative ratings, BarChart provides an absolute rating. They equal weight each indicator in each of the short-term, medium-term and long-term categories, then offset the Buys by the Bells to get a net rating of Buy, Sell or Hold.

Link to its description of its method.

It describes TrendSpotter this way: "TrendSpotter is a computerized trend analysis system, developed by Barchart.com. The system uses a combination of wave theory, market momentum and volatility in an attempt to find a general trend for a specific market. TrendSpotter attempts to cut losers early and let winners run."

Disclosure: QVM has positions in IBB, AMJ, THD and EPHE as of the creation date of this article (October 7, 2012). 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: Top 20 And Bottom 20 ETFs By Technical Ranking