Many market observers are warning that after a so-called “Obama Bounce,” the sector could be due for a considerable slowdown.

Prospects that Barack Obama will become the next U.S. president continued on Tuesday to provide a surge for exchange-traded funds focused on solar energy.

“There are a lot of factors going on in markets right now, but we think there’s good evidence that at least with solar ETFs, a lot of this is coming from an Obama bounce,” said Christian Magoon, president of Claymore Securities.

He was speaking as the day’s session along Wall Street was finishing and right before many polling centers were opening on the East Coast. Later in the night, of course, results were expected in the race between Obama and Sen. John McCain.

The Bush administration has focused more on oil- and transportation-related issues, noted Magoon. “But this presidential campaign has really brought more attention to solar energy. And Jim Cramer led off his television show on Monday making a solar ETF one of his first post-election trades,” said Magoon.

The popular CNBC stock trader picked The Claymore/MAC Global Solar Energy ETF (NYSEArca: TAN) as one of his top choices for the new year. It was up more than 10% in the final hour of trading. That came after TAN jumped better than 15% the day before. In the past five trading days, the ETF has gained 48%-plus, according to Morningstar data.

That signals a complete turnaround for TAN, which launched in April. In the past three months, the fund had returned -48.32% through Monday.

The Market Vectors Solar Energy ETF (AMEX: KWT) has gotten an even bigger bounce. The fund, which also launched in April, has soared—though by somewhat less. In the past five trading days, it’s up 45%; on Monday alone it gained 11.66%.

Obama is considered more solar-friendly than Republican candidate John McCain in some circles. But analysts along Wall Street have been putting out notes lately warning that such views, whether accurate or not, aren’t enough fuel to support such a big run-up in stock prices.

Many market observers are warning that after a so-called “Obama Bounce,” the sector could be due for a considerable slowdown.

But it certainly has served to raise the profile again of alternative energy ETFs. Niche funds such as TAN and KWT are getting an extra kick as their underlying benchmarks, both of which use different methodologies for screening out pure-plays from large conglomerates.

But the solar energy market is a small market, and these are very focused ETFs, holding less than 30 companies each in a typical reporting period. (See related article here.)

Magoon also pointed out that no matter who wins the White House race, “both candidates have been talking about solar and alternative energies a lot.”

“A new administration is likely to raise the profile for solar ETFs as a whole, whether it’s Obama or McCain,” he said. “So we’re seeing this election as a positive no matter who wins.”

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