Long-Term Top Is Solid Resistance for This ETF

03/03/2010 12:01 am EST

Focus: ETFS

Shares of the ETF Biotech HOLDRS (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.


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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 share price 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.

By Frank Kollar of FibTimer.com

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