Our January ETF Power Rankings were dominated by energy funds. In fact, 13 of the highest-rated 15 ETFs were energy related.
Not this month.
The Top 5 ETFs are quite diverse, ranging from growth to energy to tech to financials. That kind of breadth is positive.
Let’s dive right into the Top ETFs in my Quantum Edge System, and then we’ll look at the highest-rated stock on the list, the ETF with the most Big Money buy signals, and one anomaly in this month’s rankings.
#1 Innovator IBD 50 ETF (FFTY)
- Quantum Score: 72.3, up from 70.4 last month
- Last 3 months: +12.6%
- Top 5 holdings: Hims & Hers Health (HIMS), Root, Inc. (ROOT), GRAIL (GRAL), Stride (LRN), Palantir Technologies (PLTR)
#2 Alerian MLP ETF (AMLP)
- Quantum Score: 71.7, up from 70.4 last month
- Last 3 months: +10.4%
- Top 5 holdings: Plains All American Pipeline (PAA), MPLX LP (MPLX), Energy Transfer (ET), Western Midstream Partners (WES), Enterprise Products Partners (EPD)
#3 First Trust Dow Jones Internet Index Fund (FDN)
- Quantum Score: 71.6
- Last 3 months: +17.1%
- Top 5 holdings: Meta Platforms (META), Amazon.com (AMZN), Netflix (NFLX), Salesforce (CRM), Alphabet (GOOGL)
#4 FT Vest Dow Jones Internet & Target Income ETF (FDND)
- Quantum Score: 71.6
- Last 3 months: +14.6%
- Top 5 holdings: Meta Platforms (META), Amazon.com (AMZN), Netflix (NFLX), Salesforce (CRM), Alphabet (GOOGL)
#5 iShares U.B. Broker-Dealers & Securities Exchanges (IAI)
- Quantum Score: 71.1
- Last 3 months: +16.8%
- Top 5 holdings: Goldman Sachs (GS), Morgan Stanley (MS), S&P Global Inc. (SPGI), Charles Schwab (SCHW), CME Group (CME)
Highest-Rated Stock
Not surprisingly, the highest-scoring stock in the Top 5 ETFs is in the top-ranked fund. Palantir Technologies (PLTR) has a big Quantum Score of 87.9 after soaring 24% on Tuesday following blowout earnings.
That big jump helped vault FFTY to the top spot in the Power Rankings.
Palantir is an AI software company that specializes in big data analytics, and it is on fire right now. Shares have quadrupled in just six months, and as amazing as that is, the 91.2 Technical Score is higher than I like to see when thinking of buying a stock. It often signals short-term overbought and the likelihood of a pullback.
Still, the fundamentals look strong at 83.4. Sales and earnings are growing well, debt is low, and the profit margin is solid. The one red flag is valuation with shares at nearly 200 times earnings.
The ETF Big Money Is Buying
In addition to tracking Big Money across the market and in individual stocks, my system also follows the flows in ETFs.
Only one of the Top 5 ETFs has generated recent buy signals, and it’s not the top one.
It’s #2… the Alerian MLP ETF (AMLP). Here’s a peek at the data in my Quantum Edge system:
Source: MAPsignals.com
Those green bars are days where my algorithms identified unusually heavy buying that indicates some of the biggest investors in the world are at work. You can see 14 green bars above with the most recent coming just yesterday.
Notice how the signals often cluster and drive the ETF’s price (blue line) up at the same time. That’s a typical pattern for Big Money.
There are also three red bars on that chart, which are Big Money sell days. But buying far outnumbered selling, and those selling days also marked lows, as prices turned higher after both. That’s also a typical pattern for Big Money.
I used my experience handling institutional trades to program the system to identify Big Money’s footprints, which the major players like to cover up. This is a huge advantage because institutional volume makes up between 70% and 90% of all volume each trading day.
The Anomaly
You might have noticed that the third- and fourth-ranked ETFs have similar names and symbols – First Trust Dow Jones Internet Index Fund (FDN) and FT Vest Dow Jones Internet & Target Income ETF (FDND). They also invest in the same stocks.
The first one tracks the Dow Jones Internet Composite Index with the primary goal of capital appreciation. The second’s primary goal is income using options on stocks within the Dow Jones Internet Composite Index.
Despite differing objectives, they have the same top five holdings – all technology titans: Meta Platforms (META), Amazon.com (AMZN), Netflix (NFLX), Salesforce (CRM), and Alphabet (GOOGL).
The highest-rated of those is META with its 82.8 Quantum Score. Interestingly enough, all but CRM have Technical Scores of 85.3, but META separates itself that fundamental rating of 79.2.
META has enjoyed the best start to the year as well with shares up more than 20% already. Shares have increased 14 consecutive trading sessions, which is rare for any stock. Historical trends tell us it’s due for a breather soon.
I find the breadth of this month’s ETF power rankings quite positive. The more stocks and ETFs getting bought, the better for the market overall. This gibes with my Big Money Index, which tracks money flows across the market. It has risen from 36.7 in mid-January to 52 today, which tells us that on the whole Big Money is buying more than selling.
There are opportunities out there, despite occasional volatility and rollercoaster headlines. Just be sure to stay focused on both the fundamentals, technicals, and Big Money inflows. That’s how you stack the odds in your favor.
Talk soon,
Jason Bodner,
Editor, Jason Bodner’s Power Trends
P.S. Quantum Edge Pro members have full access to the scores in my system – the Quantum Score, Fundamental Score, and Technical Score – on roughly 6,000 stocks. Click here to learn more and put that power to work for you.