Best ETFs For December 2021

Some huge sell days took place last month. But as you’ll see in the Big Money ETF Buys and Sells chart below, troughs tend to appear after huge sell days (like we just experienced). In other words, December has a bullish setup.

Going to MAPsignals.com, we can scan Big Money ETF Buys and Sells. Recent big selling (red bars) led markets lower as there was no huge buying (blue bars). We’ve seen a few big sell days this year. Notice what tends to happen after them? Blue bars.

Source: www.mapsignals.com

Long-term investors should look for ETFs (and their stocks), with great setups for the months ahead.

Remember: ETFs are just baskets of stocks, so we need to look at them in detail. MAPsignals specializes in scoring more than 6,500 stocks daily. If I know which stocks compose the ETFs, I can apply stock scores to the ETFs. Then I can rank them all strongest to weakest.

Let’s get to the 5 best ETF opportunities for December.

#1 Consumer Discretionary Select Sector SPDR Fund (XLY)

Consumer discretionary stocks have had a good year overall. Big Money has been buying XLY in chunks this year, especially lately. The fresh buy signals are possibly a play to capitalize on the mega-cap stocks in retail, home improvement, & more:

XLY holds solid stocks; one example is The Home Depot, Inc. (HD). Here are Big Money signals for HD:

#2 iShares MSCI USA Quality Factor ETF (QUAL)

As the name implies, this ETF is all about quality. With stocks, that means profitable, growing companies – the cream of the crop – and that’s what QUAL holds. There was a big washout around October (red bars), but look closely and you’ll see how big dips have preceded big rises:

One great stock QUAL holds is NIKE, Inc. Class B (NKE). It’s a long-time Big Money favorite with awesome fundamentals. As the multi-year chart below shows, when red appears on great stocks, it’s usually an opportunity to get quality on sale:

#3 iShares MSCI USA Momentum Factor ETF (MTUM)

The MTUM is a momentum-based ETF that holds a wide range of high-flying stocks (but they’re also subject to downward pressure). It’s been a solid performer all year, especially early on and then again in the latter part of 2021:

One big winner within MTUM is Tesla, Inc. (TSLA). It’s an outlier stock:

#4 iShares Russell 1000 ETF (IWB)

The first three ETFs were from the stronger part of my ranked list. Now we look for bargains by identifying weaker ETFs holding stocks with strong fundamentals. IWB holds large- and mid-cap U.S. stocks, which have driven markets upward for a while now. After recent highs, IWB has pulled back some, which could be an opportunity:

This ETF holds great stocks. One such winner is Microsoft Corporation (MSFT). Big Money loves it. The multi-year chart says don’t bet against it:

#5 iShares Core S&P Small Cap ETF (IJR)

We have a new MAPsignals author on the team, Alec Young. He brought IJR to our attention as it tracks the S&P 600, a cap-weighted index of U.S. small-cap equities. Such stocks are looking to grow. So, within an ETF like IJR, some new outliers could be flying under the radar. IJR has pulled back recently, but has strong potential over the long-term:

A great stock in IJR is Innovative Industrial Properties Inc (IIPR). It has the potential to be an outlier. Big Money has shown interest in IIPR because of its solid fundamentals, which helps make me a believer that it could thrive (as it has since Big Money dove in):

Here’s a Big Money recap:

  • When Big Money buying pours in, stocks tend to go up
  • Red selling on great quality can be a great opportunity
  • Repeated buying usually means outsized gains

Let’s summarize here:

XLY and QUAL rank high. MTUM, IWB, and IJR, however, rank lower on our list, due to weaker technicals. That’s why I think these weaker ETFs represent great potential bargains.

The Bottom Line

XLY, QUAL, MTUM, IWB, and IJR are my top ETFs for December 2021. November proved to be a dud relative to its usual performance. But 2021 can still end strong. Many ETFs and stocks have pulled back, especially recently, creating potentially attractive opportunities. There’s still a lot to like long-term.

To learn more about MAPsignals’ Big Money process please visit: www.mapsignals.com

Disclosure: the author holds no positions in XLY, QUAL, MTUM, IWB, IJR, TSLA, MSFT, or IIPR, but holds long positions in HD and NKE in personal accounts at the time of publication.

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