Best ETFs For August 2021

Hendrik Bessembinder proved it with his research in his paper “Do Stocks Outperform Treasury Bills?”

That’s why I spend my time crafting portfolios chock full of outlier stocks. If you choose right, you’ll have enormous gains on your hands in the years to come.

Now, I pick my ETFs perhaps a bit differently than other people. I can find outlier ETFs by tracking the Big Money. But that alone isn’t enough: when I catalog the components and find outlier stocks underneath… that’s the winning recipe.

That’s how I found the best big money ETFs for August.

First, I looked at all ETFs making Big Money signals by going to MAPsignals.com and scanning the Big Money ETF Buys and Sells chart. I looked for recent days with heavy buying (the bright blue spikes):

Source: www.mapsignals.com

Once I knew which ETFs Big Money was buying, then I wanted the best opportunities. Remember: ETFs are just baskets of stocks. MAPsignals specializes in scoring more than 6,000 stocks daily. Therefore, if I know which stocks make up the ETFs, I can apply the stock scores to the ETFs. Then I can rank them all strongest to weakest.

So let’s get to the 5 best ETF opportunities for August. Given that usual seasonal summer volatility is here, and the stock market is a constant washing machine of sector rotations, we are taking a barbell approach this month. We went for 3 of the strongest ETFs and 2 weaker ones while still having strong fundamental qualities

#1 Technology Select Sector SPDR Fund (XLK)

First off, tech is king again. We can see that Big Money has been plowing money into this ETF over the last year. We saw a few fresh buy signals recently too:

XLK holds some awesome stocks and one great example is Fortinet, Inc. (FTNT). Below we see the Big Money signals for FTNT:

#2 iShares U.S. Home Construction ETF (ITB)

Anyone trying to buy a home right now may find it’s tougher than usual, especially here where I live in South Florida. Building supplies and home inventory is scarcer than usual due to the pandemic. But with rates remaining low for the near future and construction booming, the setup is nice to take advantage of an ITB pullback from highs (don’t let the red sells confuse you- if there is selling on quality ETFs holding great stocks, it’s often an opportunity):

One great stock that ITB holds is Sherwin Williams Co. (SHW). The paint maker has their product deployed in many new homes being built as well as older ones being remodeled. It has awesome fundamentals and some recent big money buying:

#3 iShares Russell 1000 Growth ETF (IWF)

Growth has seen its ups and downs this year. But IWF holds some phenomenal stocks. It’s also collecting lots of green:

As I said, IWF holds a plethora of great growth stocks. One big winner that caught my eye is Veeva Systems, Inc. (VEEV). It was a huge winner last year and is suddenly seeing a resurgence:

#4 ARK Next Generation Internet ETF (ARKW)

Cathie Woods, the star of Wall Street last year has hit some head winds. Her ETFs have suffered a bit after a monster performance last year. The ARKW saw huge buying through February then hit a wall. But the pullback, I believe, is an opportunity because it holds some terrific companies:

It holds one of my all-time favorite stocks, Nvidia Corp. (NVDA). This stock is quite possibly the biggest outlier of all. They make chips and graphics cards for computers and are the best at it. Big Money loves this stock:

#5 Invesco Solar ETF (TAN)

Solar is a boom-bust type of sector. It’s fallen significantly off its highs. Big Money loved TAN leading up through February as well. Then it got crushed:

But TAN holds some great solar stocks that make money. One industrials company in their portfolio is Fastenal Co. (FAST), which saw Big Money buying earlier in the year, and has rallied to 1-year highs:

Here’s a reminder for what to look for in the charts above:

• When Big Money buying pours in, stocks tend to go up
• Repeated buying usually means outsized gains

Let’s summarize here: the top 3 ETFs (XLK, ITB, and IWF) for August score well in terms of MAPsignals’ scores. That means Big Money has been pouring into them:

ARKW and TAN however, rank lower on our list, mainly due to weaker technicals. That’s why I think these weaker ETFs represent great potential bargains.

The Bottom Line

XLK, ITB, IWF, ARKW, and TAN are my top ETFs for August 2021. Tech, homebuilders, and growth stocks have performed well lately. My bet is they continue.

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

Disclosure: the author holds no positions in XLK, ITB, IWF, ARKW, TAN, FTNT, SHW, VEEV, NVDA, or FAST at the time of publication.

Investment Research Disclaimer

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