If there was one thing better than being short the stock market early this year, it was being short and leveraged. But then the market's spirited rebound in April again proved that leverage -- especially on the short side of the market -- could be a deadly two-way street.

As can be seen in the lower portion of the accompanying table of the biggest exchange-traded fund ratings grade upgrades and downgrades, short and leveraged has not been recommended territory of late.

Four of the five biggest ETF downgrades happened to ProShares "Ultra Short" inverse-leveraged funds. In fact, 13 of the 15 biggest recent downgrades in ETFs by TheStreet.com Ratings were for ProShares "Short" or "Ultra Short" funds.

On the top list of the highest ratings upgrades, the surging price of crude oil lifted the WisdomTree International Energy ETF ( DKA) from a C+ grade in the "hold" range to the highest possible mark of A+, which elevated it to a "buy" recommendation.

BIGGEST EXCHANGE TRADED FUND RATINGS GRADE CHANGES
NAME, TICKER & TheStreet.com RATINGS CURRENT GRADE PREV. GRADE RECOMMENDATION CHANGE YR. TO DATE TOTAL RET'N (%) 12-MO. TOTAL RET'N (%) TOTAL EXPENSE RATION (%)
MOST IMPROVED
WisdomTree International Energy (DKA) A+ C+ Hold to Buy 6.49 24.99 0.58
HOLDRS B2B Internet (BHH) C- E- Sell to Hold 14.29 33.70 0.00
Rydex S&P Equal Weight Ind ETF (RGI) A- C Hold to Buy -0.40 4.47 0.50
PowerShares Water Resources (PHO) C+ D- Sell to Hold -2.81 7.20 0.66
First Trust NASDAQ Cln Edg U.S. Liq (QCLN) D E- Strong Sell to Sell -24.00 15.36 0.60
MOST DETERIORATED
ProShares Ult Sht Rus Mid Cp Growth (SDK) C- A+ Buy to Hold 6.25 5.77 0.95
ProShares Ultra Short QQQ (QID) E- C+ Hold to Sell 11.88 -10.02 0.95
Market Vectors TR Gold Miners (GDX) D- B+ Buy to Sell -4.87 12.01 0.55
ProShares Ultra Short Semiconductor (SSG) D+ A Buy to Sell 14.38 6.94 0.95
ProShares Ultra Short Industrials (SIJ) D+ A- Buy to Sell 2.55 -4.00 0.95
Source: TheStreet.com Ratings - Data as of 4/30/2008.
For an explanation of our ratings, click here.

But, as has been a growing trend, the "old energy" WisdomTree International Energy ETF was joined on the upgrade roster by an alternative-energy fund. The First Trust NASDAQ Clean Edge U.S. Liquid ETF ( QCLN) matches the NASDAQ Clean Edge U.S. Liquid Series Index, an equity index designed to track the performance of clean-energy companies that are publicly traded in the U.S.

A heavy investor in solar energy companies such as First Solar Inc. ( FSLR), Suntech Power Holdings Co. Ltd. ( STP) and SunPower Corp. ( SPWR), QCLN edged from the "strong sell" grade range to a "sell" rating closer to the "hold" threshold.

Keeping the alternative-energy fund and the petroleum-intensive WisdomTree International Energy ETF company on the upgrade list is a fund tagged by some as the "new oil": water. Even though it's down slightly for the year to date, the PowerShares Water Resources ETF ( PHO) was lifted from "sell-recommended" territory to a "hold" recommendation.
Richard Widows is a senior financial analyst for TheStreet.com Ratings. Prior to joining TheStreet.com, Widows was senior product manager for quantitative analytics at Thomson Financial. After receiving an M.B.A. from Santa Clara University in California, his career included development of investment information systems at data firms, including the Lipper division of Reuters. His international experience includes assignments in the U.K. and East Asia.