ETF Winners of the Week: Profit-Taking in Semis and Energy

As I write, a few minutes after the open on Thursday morning, a number of top ETF PowerRatings funds are rallying toward potential exit points. These include the ^VWO^, which earned an ETF PowerRating of 10 back on February 8, and the ^EWM^.

However, there are a few top rated exchange-traded funds that have already made their moves to the upside and likely have been targeted for profit-taking by high probability traders who began taking positions in ETFs like these over the past few days on market weakness.

Let’s look at three recent examples involving a variety of different types of exchange-traded fund.

First up is the ^SMH^. SMH earned a top ETF PowerRating of 10 on the close on February 4 at approximately 24.51. It was the closest the ETF had pulled back to its 200-day moving average since it first crossed above its 200-day moving average in May 2009.

SMH Chart

By February 10th, SMH was rallying back into overbought territory, allowing ETF PowerRatings traders to lock in gains as the ETF closed with a gain of more than 3%.

Commodity-based exchange-traded funds get their knocks around here from time to time due to their tendency to trend compared to other ETFs like country ETFs and sector ETFs. However, our testing has shown positive results with commodity-based ETFs and the ^IEZ^ was another example of that.

IEZ Chart

Closing on February 8 at 40.95 with an ETF PowerRating of 10, the IEZ had also retreated closer to its 200-day moving average than it had at any point since breaking out above that level in July.

Two days later, the IEZ had advanced into overbought territory above the 200-day, letting high probability traders exit with gains of nearly 3%.

The last example for today is a country/regional fund: the ^AAXJ^.

AAXJ Chart

Here, we are looking at the oversold rally in an ETF that earned an ETF PowerRating of 9 rather than 10. While our 10-rated ETF have made significant returns in the short term nearly 80% of the time in our testing, 9-rated ETFs have also fared well, making similarly significant, short term gains more than 75% of the time since 2003.

In the case of AAXJ, an ETF PowerRating of 9 on February 5th alerted high probability traders to the potential opportunity in the regional exchange-traded fund. Those traders who pursued that opportunity were able to lock in gains just three days later as AAXJ moved back to overbought territory for a gain of more than 2%.

Isn’t it time you gave ETF PowerRatings a try? Our top-rated ETFs have been correct nearly 80% of the time since 2003. Click here to launch your free, 7-day trial to our ETF PowerRatings today!

David Penn is Editor in Chief at