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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 ETN is one of the top performing ETFs thus far in 2012, jumping 185.86 per cent. 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 ETF does an average daily volume of 528,000 and is up 181.91 per cent for the year.

Financials performed strongly in 2012, which means the Direxion Daily Financial Bull 3X Shares did very well. The ETF is up 62.4 per cent 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.

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iShares Dow Jones U.S. Home Construction ramped up 64.6 per cent 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.

Low-Volume but Notables

Direxion Daily Retail Bull 3X Shares was one of the top performers this year, racking up an 82.76 per cent 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.

Proshares Ultra Nasdaq Biotechnology is another star performer, up 74.01 per cent this year, but with its average daily volume at about 20,000 some caution is warranted. The ETF was up nearly 100 per cent 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 signalling the longer term downtrend which began in October is continuing, and the price could fall below $49.

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.

At the time of writing, Cory Mitchell did not own any shares in any company mentioned in this article.

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