IGW and SMH Look Most Promising of Sector ETFs

Includes: SMH, SOXX
by: Tate Dwinnell

The following table shows the ETFs with greatest demand (as measured by price and volume movement over the past 20 trading days), writes Tate Dwinnell at Canslim Investing. The DI score (for 20 and 40 trading days) is a proprietary indicator of SelfInvestors.com and measures price and volume movements.  The higher the score, the healthier the demand. 

Of course this indicator is best used in conjunction with other information, such as where the price is in relation to key support and resistance levels (such as the 50 and 200 DMA), which can be seen in the last 2 columns. 

For example, BHH is showing great demand over the last 2 months, but currently sits below resistance of the 200 day moving average.  This could indicate that a bottom has been found, but probably still too early to initiate a position.  Particularly of interest to me are the ETF's showing great demand, above both support levels, but very near the 50 day moving average.  So I'll pull up the charts of IGW, LQD, IGE, EWM, EWA and GLD to see if the price is moving up from below or dropping to meet support of the 50 day moving average.  I focus on stocks/ETF's that are dropping to meet support after rising above.  The only ETF I would eliminate from considering for a long position is LQD which has to prove itself above resistance of the 50 day moving average.

Of the group, the Ishares Semiconductor ETF (IGW) looks the most promising to me, surprisingly enough.  Both the Ishares (IGW) and Holders Trust Semi (NYSEARCA:SMH) have held up very well during the recent downturn and continue to look strong.

Ticker Name Current Price DI20 DI40 % From 50DMA % From 200DMA
BHH HLDRS B2B Internet 2.16 17 19 1.89 -13.25
EWJ Ishares Mcsi Japan 11.06 6 8 6.04 5.74
IGW Ishares Semis 57.44 5 11 1.06 8.42
EWO Ishares Austria 26.18 3 3 5.56 13.43
IYZ Ishares Telecom 23.52 3 4 -1.05 0.13
LQD Ishares Bond Fund 110.99 3 3 0.29 0.02
IGE Ishares Natural Resources 81.95 3 2 2.04 13.76
EWM Ishares Malaysia 7.35 2 25 1.24 3.38
EWA Ishares Australia 18.4 2 1 2.11 6.98
GLD streetTRACKS Gold Trust 43.61 1 3 1 1.8

The following table is a list of ETF's showing the least demand.  Not surprising to see real estate ETF's at the top of this list.  Using this list could provide some short candidates by looking at those below support and fighting resistance.  In fact, both Ishares Realty ETF's (ICF and IYR) look like promising short candidates with good liquidity.

Ticker Name Current Price DI20 DI40 % From 50DMA % From 200DMA
ICF Ishares Realty 72.59 -27 -30 -1.02 7.3
IYR Ishares US Real Estate 63.77 -23 -26 -1.92 5.11
EWZ Ishares Brazil 26.67 -12 -11 4.1 15.4
BDH HLDRS Broadband 17.42 -11 -11 5.38 12.03
EWY Ishares South Korea 34.71 -10 -9 0.26 9.29
IYC Ishares Consumer Services 59.4 -10 -10 -2.04 0.07
EWW Ishares Mexico 29.09 -7 -5 1.39 13.37
RTH HLDRS Retail 96.14 -6 -8 -3.18 -0.5
TTH HLDRS Telecom 26.79 -6 -4 -2.48 -2.72
XLY SPDR Consumer Discretionary 33.45 -6 -5 -1.39 -0.42

« Opinions expressed here are those of the individual authors and do not necessarily represent the opinion of SeekingAlpha or its management. »

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