Ways to spot alternative energy etf opportunities

Alternative energy ETF could be viewed as good investing opportunity for investors who think that our world is going to experience shortages of natural resources. Commodity ETF shares are very popular these days, as the price of commodity ETFs is moving a lot.

Alternative energy ETF shares are orientated to areas of sun-generated energy and wind-generated energy. This group of energy ETFs is part of my list of exchange traded funds I monitor regularly for trading opportunities.

These alternative exchange traded funds offer only a few opportunities during a year but their ETF trends could last a long time. So if they are caught and entered early, they could generate huge profits for any ETF trader or investor. So I think it could be good to have them in a list of exchange traded funds that could be used for selection of the best etf for trading.

Solar ETF and Wind ETF

TAN is The Guggenheim Solar ETF, which track the index based on companies within the solar alternative energy industry: companies that produce solar power equipment, companies that produce fabrication products or services for solar power equipment producers, companies that supply raw materials or components to solar power equipment producers or integrators, companies that derive a significant portion of their business from solar power system sales, distribution, installation, integration or financing, and companies that specialize in selling electricity derived from solar power. There are about 33 companies in the
index.

Companies selected for the FAN ETF (First Trust Global Wind Energy) tracking index are identified as providing goods and services to alternative wind energy.

I have these two alternative exchange traded funds in my ETF List. I scan this list for active investing and trading opportunities. I like to compare them with commodity ETFs I also have in my ETF List. Let’s look at their charts:

As you can see, these two ETFs were not good choices for investors trying to make money with alternative sources of energy. They did not produce any return over the last years.

If you compare their charts with the energy exchange traded fund – DBE, representing natural resources for energy, you find that DBE produced more opportunities for active investors and traders.

I base my ETF Trading strategies on relative strength analysis. From this perspective I have to say that my main trading ideas in this area were shorting of TAN and FAN ETFs as an alternative to other energy funds. This situation can change in the future, but today (2011) I prefer to trade ETFs, where there is more opportunity for profits than in these two ETFs.