March 2, 2010
Shares of the ETF Biotech HOLDRS (AMEX: BBH) rallied to $103.06 on Monday, March 1. There may be a limit on the upside for this ETF.
Shares of this widely traded Biotech ETF are closing in on levels that have rarely been surpassed.
Biotech HOLDRS reached its all time high of $121.38 back on March 3, 2000. Back in 2005, Biotech HOLDRS hit $106 08 a share and then reversed and turned lower. On July 23, 2009 Biotech HOLDRS reached $103.44 before reversing.
The current $103.06 a share for Biotech HOLDRS puts this ETF right at levels that have been long term tops since 2005, and 15% below an all-time high that has not been reached since 2000.
We would be very careful with bullish positions here. The upside is extremely limited unless Biotech HOLDRS can break out above $106 a share. It has a five year history of failing at these levels and even if it does break out, there may be very limited upside potential.
On the downside, a close below $100.49 a share would probably result in declines to at least $95 a share and possibly down to the $90 level.
Disclosure: The Fibtimer.com (www.fibtimer.com) ETF Timing Strategy holds a position in Biotech HOLDRS.