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3 ETFs That Have Blown Past Their 200-Day Lines

July 30, 2013 12:48 pm
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3 ETFs That Have Blown Past Their 200-Day Lines

Moving averages may be considered a beginning technical analysis concept, but that does not diminish the profit potential mastery of the concept holds. In terms of long-term, simple moving averages, the 200-day line is one frequently cited and used by technical analysts.

The 200-day simple moving average is indeed simple to understand. Any simple moving average is merely the number of closing prices in the sample set added together and divided by the number of days in the moving average, in this case 200. It is believed that securities that comfortably above that moving average are displaying healthy technicals while those that languish for long periods of time below their 200-day lines are showing bearish traits.

With that in mind, a screen was run for ETFs that are currently trading at least 20 percent above their simple 200-day moving averages. The screen returned about 70 funds, a fair amount of which are leveraged plays. Since leveraged ETFs are not every investor’s cup of tea, those funds will be excluded here in an effort to focus on the plain vanilla funds that are trading comfortably above their 200-day lines.

Market Vectors Biotech ETF (NYSE: BBH)
To say biotechnology ETFs are having an excellent year is an understatement. All four of the major biotech funds are trading comfortably above their simple 200-day moving averages.

In the case of BBH, this ETF is 25.5 percent above that line. BBH also gets the nod because it has outperformed the larger iShares Nasdaq Biotechnology ETF (NASDAQ: IBB) by several percentage points this year. However, IBB, the largest biotech ETF by assets, is no slouch. That ETF is flirting with new all-time highs and is 24.7 percent above its 200-day line.

Investors should know what they are getting with any ETF and with BBH that means a combined 22 percent weight to Gilead Sciences (NASDAQ: GILD) and Amgen (NASDAQ: AMGN).

Related: Interesting Similarities Among 2013’s Top-Performing ETFs.

iShares U.S. Broker-Dealers ETF (NYSE: IAI)
What is interesting about IAI is not just the fact that it is one of a small number of ETFs that have a noteworthy allocation to Goldman Sachs (NYSE: GS). Arguably more interesting is that although the ETF is more than seven years old, only recently has the fund caught the eyes of many ETF industry observers. Fortunately, avid readers of this space know the fund was recommended back in January.

Following that advice back then would have rewarded with investors with an ETF that is up nearly 37 percent year-to-date and almost 21 percent above its 200-day line. That is better than learning about IAI for the first time in mid-July.

PowerShares NASDAQ Internet Portfolio (NASDAQ: PNQI)
PNQI has recently been on the receiving end of ample praise due to its allocations to sexy Internet stocks such as Facebook (NASDAQ: FB), Amazon (NASDAQ: AMZN) and TripAdvisor (NASDAQ: TRIP).

However, like IAI, PNQI’s diminutive stature ensured that is went largely overlooked by the ETF peanut gallery. These days, PNQI’s bandwagon is crowded, but some were prescient enough to recommend the ETF back in January.

Those that listened to that advice now have an ETF up more than 30 percent year-to-date and 21.5 percent above its 200-day moving average.

For more on ETFs, click here.

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