With 2012 nearing its conclusion, where were the biggest ETF profits? You may have heard of some of these top-performing ETFs, while others that do small amounts of volume may have slipped under your radar, but the gains are still impressive. Looking at where the ETF has been is only half the story though; the other half is to look at where it could go in 2013.

The Velocity Shares Daily Inverse VIX (ARCA:XIV) ETN is one of the top performing ETFs thus far in 2012, jumping 185.86%. As an inverse measure of the VIX, this ETF is really measuring the lack of volatility or lack of fear in the market. The overall price appreciation in the major indexes this year has pushed optimism up and fear down, leading to a very strong trend in this ETF. The trend remains strong, and a new 52-week high above $19.75 will show that there is still more upside available. A minor support is $18, and if that level is broken it will create a lower-low and signal a potential reversal. A more pivotal support level is $15.40, and if broken indicates a downtrend is likely underway. The ETF does about 7 million shares per day, proving great liquidity. There is a similar ETF which has also done very well this year, but has significantly lower volume: the ProShares Short VIX Short-Term Futures (ARCA:SVXY) ETF does an average daily volume of 528,000 and is up 181.91% for the year.

SEE: Technical Analysis: Support And Resistance

XIV is one of the top performing ETFs for 2012

Financials performed strongly in 2012, which means the Direxion Daily Financial Bull 3X Shares (ARCA:FAS) did very well. The ETF is up 62.4% in 2012 and with about 3 million in daily volume it is one of the more popular leveraged ETFs. The financial bull ETF made a 52-week high at $119.97 in September, but has failed to rally above that point on multiple subsequent attempts. In November it also broke below prior support levels. The lower-high and lower-low indicated this ETF may already be in a downtrend. A rise above $119.97 means more upside is likely to come, but if that level is not reached then it is likely the ETF will slide back below the November low of $93.82.

SEE: Interpreting Support And Resistance Zones

FAS performed strongly in 2012

iShares Dow Jones U.S. Home Construction (ARCA:ITB) ramped up 64.6% so far in 2012, with most of the gains coming between January and September. Since mid-September the ETF has moved mostly laterally, putting in a marginally higher 52-week high in late October. The breakout of this range will be pivotal to the longer term direction of the ETF. A rise back above $21.33 indicates further upside with a target of $24. On the other hand, a slide below the November low of $18.53 signals a decline to $16. The average daily volume is 3 million shares.

ITB ramped up in 2012

Low-Volume but Notables
Direxion Daily Retail Bull 3X Shares (ARCA:RETL) was one of the topping performers this year, racking up an 82.76% gain. The downside is it only does about 3,000 in daily volume. Currently the trend is up, but that may be shifting. The ETF tested the 52-week high ($122.23) in early December, but failed to reach it, and has since been in decline. The lower-high is a warning sign, but we won't know for sure if this is a reversal until support at $96.71 is broken. If that occurs, the downtrend is in place and lower prices are likely overall. A rise back above $122.23 signals the uptrend is still in play.

RETL was one of the top performers in 2012

Proshares Ultra Nasdaq Biotechnology (Nasdaq:BIB) is another star-performer up 74.01% this year, but with an average daily volume of about 20,000 and some caution is warranted. The ETF was up nearly 100% for the year in October and then had a tumble, erasing more than half of those profits. Since mid-November a new uptrend has emerged. While the ETF remains well below the 52-week high of $69.59, there are short-term positive signals. The December rally above resistance at $60.60 indicates short-term strength. Short-term support is at $57.56 though, with a drop below that level signaling the longer term downtrend which began in October is continuing, and the price could fall below $49.

SEE: Support & Resistance Basics

BIB was another top performer in 2012

The Bottom Line
Opportunities don't only occur in the most popular or high-volume ETFs. In 2013 these ETFs will continue to deserve attention, both on the long-side or if reversals develop. Some of these ETFs are still going strong, while are others are flashing warning signs. Watch the trendline lines and support/resistance levels. Lower highs and lower-lows indicate the uptrend may be shifting to a downtrend, while a rally above prior highs signals the uptrend is still intact.

Charts courtesy of stockcharts.com

At the time of writing, Cory Mitchell did not own any shares in any company mentioned in this article.

Related Articles
  1. Mutual Funds & ETFs

    ETF Analysis: ProShares UltraPro Nasdaq Biotech

    Obtain information about an ETF offerings that provides leveraged exposure to the biotechnology industry, the ProShares UltraPro Nasdaq Biotech Fund.
  2. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI Europe Financials

    Learn about the iShares MSCI Europe Financials fund, which invests in numerous European financial industries, such as banks, insurance and real estate.
  3. Mutual Funds & ETFs

    ETF Analysis: SPDR S&P Insurance

    Learn about the SPDR S&P Insurance exchange-traded fund, which follows the S&P Insurance Select Industry Index by investing in equities of U.S. insurers.
  4. Mutual Funds & ETFs

    ETF Analysis: SPDR S&P Emerging Markets Small Cap

    Learn about the SPDR S&P Emerging Markets Small Cap exchange-traded fund, which invests in small-cap firms traded at the emerging equity markets.
  5. Mutual Funds & ETFs

    ETF Analysis: ETFS Physical Platinum

    Learn about the physical platinum ETF. Platinum embarked on a bull market from 2001 to 2011, climbing to record prices along with other precious metals.
  6. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI Turkey

    Learn about the iShares MSCI Turkey exchange-traded fund, which invests in a wide variety of companies' equities traded on Turkish exchanges.
  7. Mutual Funds & ETFs

    ETF Analysis: PowerShares S&P 500 Downside Hedged

    Find out about the PowerShares S&P 500 Downside Hedged ETF, and learn detailed information about characteristics, suitability and recommendations of it.
  8. Mutual Funds & ETFs

    ETF Analysis: Guggenheim Enhanced Short Dur

    Find out about the Guggenheim Enhanced Short Duration ETF, and learn detailed information about this fund that focuses on fixed-income securities.
  9. Mutual Funds & ETFs

    ETF Analysis: iShares US Oil&Gas Explor&Prodtn

    Learn about the iShares U.S. Oil & Gas Exploration & Production ETF, which provides an efficient way to invest in the exploration and production sector.
  10. Mutual Funds & ETFs

    ETF Analysis: iShares Morningstar Small-Cap Value

    Find out about the Shares Morningstar Small-Cap Value ETF, and learn detailed information about this exchange-traded fund that focuses on small-cap equities.
  1. Exchange-Traded Fund (ETF)

    A security that tracks an index, a commodity or a basket of assets ...
  2. Exchange-Traded Mutual Funds (ETMF)

    Investopedia explains the definition of exchange-traded mutual ...
  3. Fintech

    Fintech is a portmanteau of financial technology that describes ...
  4. Indicator

    Indicators are statistics used to measure current conditions ...
  5. Intraday Momentum Index (IMI)

    A technical indicator that combines aspects of candlestick analysis ...
  6. Lion economies

    A nickname given to Africa's growing economies.
  1. What assumptions are made when conducting a t-test?

    The common assumptions made when doing a t-test include those regarding the scale of measurement, random sampling, normality ... Read Full Answer >>
  2. What does a high turnover ratio signify for an investment fund?

    If an investment fund has a high turnover ratio, it indicates it replaces most or all of its holdings over a one-year period. ... Read Full Answer >>
  3. Does index trading increase market vulnerability?

    The rise of index trading may increase the overall vulnerability of the stock market due to increased correlations between ... Read Full Answer >>
  4. What is the difference between passive and active asset management?

    Asset management utilizes two main investment strategies that can be used to generate returns: active asset management and ... Read Full Answer >>
  5. How are double exponential moving averages applied in technical analysis?

    Double exponential moving averages (DEMAS) are commonly used in technical analysis like any other moving average indicator ... Read Full Answer >>
  6. Is there a situation in which wash trading is legal?

    Wash trading, the intentional practice of manipulating a stock's activity level to deceive other investors, is not a legal ... Read Full Answer >>

You May Also Like

Trading Center

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!