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Sector Rotation: Market Leaders And Emerging Trends

|Includes: BJK, FAN, PBE, Invesco Shipping ETF (SEA), SOIL

The best sector ETFs have greatly outperformed the broad market averages in the last few months. Our favorites include the Global X Social Media Index ETF (NASDAQ:SOCL), the First Trust Global Wind Energy ETF (NYSEARCA:FAN), the Market Vectors Gaming ETF (NYSEARCA:BJK) and the PowerShares Dynamic Biotechnology & Genome Portfolio ETF (NYSE:PBE):

The leading sector ETFs have provided impressive returns, but are becoming increasingly overbought now and are vulnerable to a pull back.

Here are two ideas for investors looking to rotate money to new investments. The first one is the Guggenheim Shipping ETF (NYSE:SEA), a continuation play for a very bullish ETF. SEA consolidated in a long-term uptrend from September to November last year, but broke out to new highs in late December, and moved sideways again in the last few weeks. Another breakout to new highs would be a sign of the continuation of the bullish trend.

The Global X Fertilizers/Potash ETF (NYSEARCA:SOIL) represents an emerging sector. SOIL declined in the first half of 2013 making a low in September that was followed by a sideways move for the rest of the year. A breakout above the resistance (blue line on chart) on increasing volume can turn this sector ETF into an exciting opportunity.