Two ETFs with High Potential

S&P Homebuilders ETF (XHB)  gained more than 3% last week and surprised many investors because there was a recent news that sales of new homes in December 2009 fell by 7.6% and it ended
the year with 23% lower in new home sales tax credits compared to 2008.  The new hope for the builders have formed in 2010 as homebuilder companies such as DHI are starting to report quarterly profit and expecting to stay profitable throughout 2010.  The reason for this is due to the low mortgage rates and tax credit.

Looking at one year chart, XHB has been trading in between $14 and $16.50 range for many months now.  As XHB has been consolidating during this period, it could gain momentum and make a breakout of this range.  Watch this stock carefully into March 2010.

S&P Retail ETF (XRT) is another area where it has been performing well recently as retailers are starting to gain more confidence from the consumers.  Currently, XRT is trading at its 52 week high but is there more room for it to move higher?  In looking at six month chart, XRT has been trading in a similar pattern to XHB.  XRT also has been consolidating between $34.50 and $37 and is about to make a run out of this range. It would serve investors well by keeping an eye on these two ETFs to determine if they can continue their positive momentum or if they will lose steam and eventually fall.

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