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. Investing News

    Should You Be Betting with Buffett Right Now?

    Following Warren Buffett's stock picks has historically been a good strategy. Is considering his biggest holdings in 2016 a good idea?
  2. Active Trading Fundamentals

    4 Stocks With Bullish Head and Shoulders Patterns for 2016 (PG, ETR)

    Discover analyses of the top four stocks with bullish head and shoulders patterns forming in 2016, and learn the prices at which they should be considered.
  3. Chart Advisor

    Uptrending Stocks Dwindle, a Few Remain (EW, WEC, WR)

    The number of uptrending stocks is shrinking, but here a few that remain in uptrends.
  4. Chart Advisor

    Trade Setups Based on Descending Trend Channels (LBTYK, RRC)

    These descending trend channels have provided reliable sell signals in the past, and are giving the signal again.
  5. Chart Advisor

    How Are You Trading The Breakdown In Growth Stocks? (VOOG, IWF)

    Based on the charts of these two ETFs, bearish traders will start turning their attention to growth stocks.
  6. Mutual Funds & ETFs

    Pimco’s Top Funds for Retirement Income

    Once you're living off the money you've saved for retirement, is it invested in the right assets? Here are some from PIMCO that may be good options.
  7. Chart Advisor

    Watch This ETF For Signs Of A Reversal (BCX)

    Trying to determine if the commodity markets are ready for a bounce? Take a look at the analysis of this ETF to find out if now is the time to buy.
  8. Mutual Funds & ETFs

    ETFs Can Be Safe Investments, If Used Correctly

    Learn about how ETFs can be a safe investment option if you know which funds to choose, including the basics of both indexed and leveraged ETFs.
  9. Mutual Funds & ETFs

    The Top 5 Large Cap Core ETFs for 2016 (VUG, SPLV)

    Look out for these five ETFs in 2016, and learn why investors should closely watch how the Federal Reserve moves heading into the new year.
  10. Chart Advisor

    Breakout Opportunity Stocks: CPA, GNRC, WWE

    After a period of contracting volatility, watch for breakouts and bigger moves to come in these stocks.
  1. What is Fibonacci retracement, and where do the ratios that are used come from?

    Fibonacci retracement is a very popular tool among technical traders and is based on the key numbers identified by mathematician ... Read Full Answer >>
  2. Should mutual funds be subject to more regulation?

    Mutual funds, when compared to other types of pooled investments such as hedge funds, have very strict regulations. In fact, ... Read Full Answer >>
  3. Do ETFs pay capital gains?

    Exchange-traded funds (ETFs) can generate capital gains that are transferred to shareholders, typically once a year, triggering ... Read Full Answer >>
  4. How do real estate hedge funds work?

    A hedge fund is a type of investment vehicle and business structure that aggregates capital from multiple investors and invests ... Read Full Answer >>
  5. Are Vanguard ETFs commission-free?

    While some Vanguard exchange-traded funds (ETFs) are available commission-free from third-party brokers, a large portion ... Read Full Answer >>
  6. Do Vanguard ETFs require a minimum investment?

    Vanguard completely waives any U.S. dollar minimum amounts to buy its exchange-traded funds (ETFs), and the minimum ETF investment ... Read Full Answer >>
Trading Center