You’ve seen the billboards for “We Buy Ugly Houses.” My message here is “I don’t buy ugly charts.” As ROAR Scores indicate, there is always a chance an ETF or stock can rally. But when the odds are long, I tend to either stay away, or keep my position size very low, writes Robert Isbitts, founder of Sungarden Investment Publishing.
The first ETF traders should avoid is the ALPS Clean Energy ETF (ACES). The chart is anything but clean, and the ROAR Score of 20 reflects it. In general terms, it has a 20% chance of a big move up, and an 80% chance of a big move down. I don’t like those odds. ACES has dipped about 8% since it turned red last month.
The iShares MSCI India ETF (INDA) is next. It’s a classic example of how a long-term, secular economic growth story will rarely be a straight-up shot for the ETF’s price. INDA turned to red (ROAR Score 30 or less).
Perhaps just as helpful is the fact that it has failed to maintain a green score (70 or higher) for most of the past 12 months. Only during the market-wide liftoff last April did it spend much time in a range that would imply strong return versus risk.
INDA is about flat over the past two years. It has shown signs of life at times, but currently it is in a high-risk formation. That’s what ROAR is telling us.
