This has been a volatile year for Internet stocks and exchange traded funds that hold those shares. The First Trust Dow Jones Internet Index Fund (NYSEArca: FDN) is up less than 1% year-to-date and that is after a 19.6% decline from the ETF’s March peak to its May trough.

That tumble has been followed by a 13% rally, underscoring the volatility faced by Internet stocks and ETFs this year. FDN is up about 1.5% in the past month, a subdued showing given the large swings experienced by the fund earlier this year and the recent consolidation in FDN could be a sign of better things to come. [Momentum Rebound Boosts Internet ETFs]

“FDN was hit hard earlier this year, but has since rallied about 16% off the lows and formed a tight-ranged consolidation above the rising 10 and 40-week MAs. The 10-week MA also recently crossed above the 40-week MA, which is a bullish sign,” notes Deron Wagner of Morpheus Trading Group.

Wagner adds “the pattern in FDN is setting up nicely and could be ready to launch higher within the next week or two. Since $FDN took such a hit off the highs, we would not look for much more than a move to the prior highs ($64ish) as a target.”

A move to $64 by FDN implies upside of just over 7% from Tuesday’s close. The $1.68 billion ETF has strengthened in recent weeks with some help from Facebook (NasdaqGS: FB) and (NasdaqGS: PCLN), among others. Those stocks, which combine for 15.5% of FDN’s weight are up an average of up an average of 8.3% over the past month.