While the market lost steam after lunch, solar energy stocks held onto their gains. Clean energy ETFs blasted off thanks to double-digit percentage gains in China Sunergy, () Solarfun Power, () Suntech Power, () Trina Solar, () Yingli Green Energy. ()

First Trust Nasdaq Clean Edge U.S. Liquid Series () led the pack. It gained 0.94, or 4%, to 24.54. It has risen 22% from its 52-week low of 20.11. But it’s 27% below its high. It broke above the 50-day average, but not above the 200-day average. That means it has more work to do to prove its strength after such a steep correction.

Top Performers

First Trust outpaced all other green ETFs last year with a 65% return. But it also dropped the most year to date, 26%. Aside from solar energy, it includes companies engaged in making biofuels, batteries and chips. Last year’s monster stock First Solar, () weighted 9%, heads the 53-stock portfolio. First Solar rocketed 795% in 2007. It shed 7% year to date.

PowerShares WilderHill Clean Energy, () the largest by assets, also gained 4%. Like First Trust, its 50-day average has crossed below the 200-day. Last year’s No. 2 performer blasted 60% in 2007. It plunged 25% year to date, but has vaulted 13% off its bottom.

Market Vectors Global Alternative Energy, () launched 11 months ago, surged 1.24 to 49.89. It has crossed above both the short-term and long-term moving averages, so it looks more bullish than the first two. It spiked 49% last year. It corrected 17% year to date.

Prospects And Risks

Anthony Welch’s firm, Sarasota Capital Strategies, has owned PowerShares WilderHill Clean Energy since it launched in March 2005.

“Clean energy isn’t going away, and it has a place in most portfolios,” said Welch. “I would caution, however, that this is a smaller cap sector and can produce wild swings in price.”

But Welch prefers PowerShares Global Clean Energy () now because of its international exposure. The portfolio weights U.S companies at 28%, Germany 16.9%, Spain 10.4%, China 7.2%, France 7.5% and Denmark 6.6%. It also includes names from Japan, Australia, Brazil and Ireland. The ETF returned 26% last year. But it lost 17% year to date. It sports the highest Relative Strength Rating, 78, in its category.

Clean energy is not only volatile, but also tied to swings in oil. When oil prices fall so does the interest in alternative energy. Since peaking at $110.35 March 17, crude oil eased to $104.83, as of Wednesday.

“The entire alternative energy industry is a creation of government intervention rather than meeting a market demand,” said Marvin Appel of Appel Asset Management. “Their fortunes will depend on politics more than anything else for years to come, especially since energy prices appear to have peaked for now.”