Four ETFs Riding an Uptrend

When reviewing charts, I like nothing better than seeing a security trading pattern steadily going up over both the long and short terms.

To find funds that may be in a consistent uptrend, we can search for technically bullish-moving-average crossovers. The five-day moving average above the 20-day average signals short-term bullishness. When this coincides with the 50-day moving average exceeding the 200-day moving average, the fund may also be trending higher in the long run.

Of the 789 U.S. domiciled exchange-traded funds we track, only 130 ETFs had five-day moving averages in excess of their 20-day figures. Limiting the group to those with 50-day averages topping the 200-day average narrows the list to a manageable 41 funds.

Eighteen of these funds have or are close to giving a fresh buy signal on the moving average convergence-divergence indicator. The convergence-divergence indicator, created by Gerald Appel, uses exponential moving averages to find turning points in the price movements of securities.

Here are my favorite four trading ideas generated by the above search.

The iShares Dow Jones US Oil & Gas Exploration & Production Index Fund(IEO) continues to trend higher.

This fund's largest two holdings are Occidental Petroleum(OXY) and Devon Energy(DVN). With Republican presidential nominee John McCain calling for the lifting of the federal moratorium on new offshore oil and gas drilling in U.S. waters, I am adding this fund to my list of winners in a potential John McCain administration.

While the iShares DJ Oil & Gas portfolio of holdings has a median market capitalization of nearly $16.0 billion, the members of the First Trust ISE-Revere Natural Gas Index Fund(FCG) compare at just $6.4 billion. The fund is on a tear, setting a new 52-week high this week. The top three holdings are Brigham Exploration(BEXP), Comstock Resources(CRK) and St. Mary Land & Exploration(SM).