momentum stocks, so little time
. There is something to be said for momentum investing also known
as buying high and selling higher for the bulls and shorting low
and covering low for the bears.
Buying high and selling higher has worked for the last $100 or
$200, perhaps more, with the likes of Apple (Nasdaq:
) and Priceline (Nasdaq:
), but with the elevated price tags sported by those and other
high momentum names, ETFs are
fertile ground for momentum seekers
To truly ride the momentum train, the trick is finding ETFs
littered with these type of stocks, not just one or two. Here are
a few to get you started.
PowerShares NASDAQ Internet Portfolio (Nasdaq:
The PowerShares NASDAQ Internet has been previously highlighted
as the ETF with perhaps the largest allocation to Priceline at
9.4%, but the fund features an array of other high momentum
names. In addition to Priceline, PNQI's top-four holdings are
), Amazon (Nasdaq:
) and Google (Nasdaq:
), all of which have been or have the potential to be momentum
names on the upside. That quartet represents about 30% of PNQI's
weight, confirming the fund's status as a "momentum ETF."
First Trust NYSE Arca Biotech Index Fund (NYSE:
It's no surprise that a biotech fund makes this list, but the
surprise may be which biotech ETF makes the cut. The old standby
of the biotech ETF group is the iShares Nasdaq Biotechnology ETF
), the largest biotech ETF. Don't get us wrong, IBB is a fine
Those in search of real momentum will enjoy the First Trust
NYSE Arca Biotech Index Fund more. FBT has outperformed IBB by
about 8% this year, but that's not the true momentum indicator.
Look at FBT's top-four holdings: Amylin Pharmaceuticals (Nasdaq:
), Regeneron Pharmaceuticals (Nasdaq:
), Illumina (Nasdaq:
) and Alexion Pharmaceuticals (Nasdaq:
Year-to-date, Alexion is the worst performer of that quarter
and that's with a gain of over 28%. Amylin and Regeneron have
more than doubled to start the year, highlighting FBT's utility
as a valid play for biotech momentum hunters.
AdvisorShares Active Bear ETF (NYSE:
The Active Bear ETF is pricy with an expense ratio of 3.29%, but
with over $197 million in assets under management, the fund is
one of the larger actively managed ETFs on the market. As we
noted earlier, momentum can be had on the downside as well and
HDGE has done a fine job of finding momentum shorts.
The fund's top-10 lineup includes Goodyear (NYSE:
), OpenTable (Nasdaq:
) and Green Mountain Coffee Roasters (Nasdaq:
). A look at those charts explains why HDGE has started to show
signs of awakening from its slumber.
Guggeneheim Solar ETF (NYSE:
Another downside momentum play, the Guggenheim Solar ETF is
simply broken and that's
putting things kindly
. After looking at the chart, it may seem like eager shorts and
put buyers are late to the party, but with nothing but the notion
that solar stocks are cheap to save TAN, down is still the path
of least resistance.
First Trust Dow Jones Internet Index Fund (NYSE:
The past week has not been kind to the First Trust Dow Jones
Internet Index Fund and the ETF could offer more in the way of
Priceline exposure. Home to 41 stocks, FDN has some constituents
that are questionable on the momentum front, but they're further
down the roster. When Google, Amazon and Priceline represent over
a third of an ETF's weight, that fund is a legitimate momentum
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