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Buy these two ETFs for 2016: Traders

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Best way to use ETFs in 2016

Investors shunned U.S.-focused equity ETFs in 2015 and instead looked abroad for opportunities.

Only 24 percent of the $236 billion that flowed into U.S.-listed exchange-traded funds this year have gone to U.S. equity funds, according to XTF.com, an ETF research site. And according to one macro trader, that's still the best move for 2016.

"One of my big themes for 2016 is that German exporters are really going to outperform," said Boris Schlossberg, managing director at BK Asset Management. "They have a lot of tailwind behind them with the lower euro."

Specifically, Schlossberg sees potential in the Wisdom Tree German Hedged Equity ETF (DXGE). What makes this ETF particularly compelling to Schlossberg is the fact that the DXGE hedges out currency exposure.

"I not bullish on the euro, so I think this is a good trade," Schlossberg said Tuesday on CNBC's "Power Lunch."

From just a pure technical perspective, one trader who relies heavily on the charts sees promise in one beaten domestic play: biotech.

"It's outperforming the market in December," said Rich Ross, chief market technician at ISI. According to Ross, the heightened volatility in equities should drive investors into growth stocks and biotech in particular.

"In this environment, growth and innovation will continue to shine," added Ross.

In terms of the actual charts, Ross sees some constructive patterns emerging in the IBB, the ETF that tracks Nasdaq biotech stocks.

"You see this ascending triangle, and that tends to be a continuation pattern," said Ross.

Technicians often look to wedges or so called ascending triangle patterns to bullish catalysts for a stock. According to Ross' chart work, a breakout higher could come if the IBB breaks above its 100-day moving average, which comes in at $304.46.

Looking longer term, Ross noted that the IBB has held its 100-week moving average for the last six years.

"We think biotech is still a great place to be."

Disclaimer

Disclosure: Schlossberg has no positions in DXGE, and Ross has no positions in IBB.