January 14, 2010
Shares of the Pharmaceutical HOLDRS Trust (NYSE: PPH have reached their highest level since the highs in their bear market rally back on August 11, 2008 at $67.97.
Only one cent below this level at the close on Wednesday, January 13, Pharmaceutical HOLDRS is poised to break out.
This widely traded ETF lost some 43% in the bear market and bottomed in March 2009. The rally since then has finally reached the 61.8% retracement level. This is critical resistance for Pharmaceutical HOLDRS.
A decisive close above $67.97 would likely lead to a run for the January 11, 2008 highs at $77.82, a 14.4% gain from Wednesday’s close.
Traders should be watching Pharmaceutical HOLDRS for any bearish reversal patterns during the next few days which could indicate a correction has begun. The 61.8% level is the do-or-die level for most stock and ETF advances.
Disclosure: The Fibtimer.com (www.fibtimer.com) ETF Timing Strategy holds a position in the Pharmaceutical HOLDRS.