Sector Week-in-Review: Momentum in Telecom, Biotech (ETFs: TTH, PBE, IBB, IYZ)

Nick Perry (Schaeffer's Investment Research) submits:
Last week we saw that losses dominated the landscape with oil services, energy, and gold among the hardest hit. This week we see that most groups bounced back:

Telecom and biotech showed a slight lead, but as you can see, gains were quite consistent as only oil services, software, and leisure showed declines. For a longer-term perspective, the bullets below show how the ETFs listed above have faired over the last six months, prior to this week. In other words, it shows how they had been performing before this week's move.

Prior Six-Month Returns for This Week's Top Performing Sector Exchange Traded Funds:

* Telecom HOLDRS (TTH) +3.3%
* PS Biotechnology & Genome (PBE) +9.5%
* iShares Nasdaq Biotech (IBB) +7.5%
* iShares DJ U.S. Telecomm (IYZ) +1.7%
* Wilshire REIT Fund (RWR) +5.8%
* Wireless HOLDRS (WMH) +1.2%
* Retail HOLDRS (RTH) -3.9%
* iShares C&S Realty Majors (ICF) +6.9%
* iShares DJ U.S. Real Estate (IYR) +4.4%
* PS Telecom & Wireless (PTE) n/a
* SPDR-Materials (XLB) +9.1%
* PS Water Resource (PHO) n/a

Prior Six-Month Returns for This Week's Bottom Performing Sector Exchange Traded Funds:

* iShares Lehman Aggregate Bond Fund (AGG) -2.0%
* PS Networking (PXQ) +11.4%
* PS Lux Nanotech (PXN) n/a
* iShares Lehman 1-3 Year Bond (SHY) -0.9%
* Semiconductor HOLDRS (SMH) +5.4%
* PS Software (PSJ) +9.6%
* iShares GS Semiconductor (IGW) +17.0%
* iShares GS Software (IGV) +3.1%
* PS Leisure & Entertainment (PEJ) +11.3%
* Software HOLDRS (SWH) +6.7%
* Oil Service HOLDRS (OIH) +25.5%
* PS Oil Services (PXJ) n/a

Digging into these funds reveals a few interesting charts...

Starting off the list is the weekly chart of the TTH, which shows the group has now rallied into resistance. This zone capped rally attempts in late-2002 and late-2004. The TTH has pushed firmly into a short-term overbought condition so the group may find it difficult to push above resistance at this time. Next we have the daily chart of the PBE, which just overtook resistance. The fund had been bouncing along its 50-day moving average (black line) and has now pushed above its recent peak near 18.50. Lastly we have the OIH, which has been pulling back for most of this month. However, the selling appears to be abating as the group tries to bounce off its December peak.