Amid Slump, This Biotech ETF Surges

05/16/2012 9:00 am EST

Focus: ETFs

While the broad market corrects lower, a popular biotech ETF has just broke out of a recent range to reach new highs, writes Frank Kollar of FibTimer.com, and a low-risk entry opportunity is now evident.

Shares of the Market Vectors Biotech ETF (BBH) have recovered from three months of sideways trading and broken out to new highs. This occurred during a broad market correction.

BBH had a three-for-one split back in February. The fund is well above its March 3, 2000 rally closing high of $40.46 (pre-split, it was $121.38).

The bear market of 2000-2002 decimated all stock sectors, especially biotech. Most sectors remain well below those 2000 highs, but BBH has now far exceeded them.

chart
Click to Enlarge

BBH broke above its three months of sideways trading in the first week of April, and while most sectors have stayed in correction mode, BBH has been moving steadily higher.

For those who see new highs as bullish, and we are on that list, BBH is a strong buy. A stop at $44.50, just below the May 4 low, creates a tight stop and a low-risk trade. There is also very strong support at $42 per share.

By Frank Kollar of FibTimer.com

Disclosure: The FibTimer.com ETF timing strategy holds a position in BBH.

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