Thursday, May 1, 2008

Time for Biotech to Turn Around?

I have been experimenting with a new volatility-centric sector rotation model that I may start talking about in more detail in this space in the coming weeks.

I mention this because the system generated a buy signal in BBH, the HOLDRS biotechnology ETF. While the system does not require a confirmation signal from today’s trading, BBH is trading up with the broader markets today, albeit with a smaller percentage rise. The chart below shows that biotech actually bottomed in January and has not participated in the rally off of the March lows. Generally a healthy biotech sector is an indication of bullish speculative activity. As such, this is one of my ‘indicator species’ charts to watch.

[Note to readers: I have heretofore avoided any disclosure statements when writing about stocks and ETFs. As my content is currently being picked up by Seeking Alpha and other aggregator sites, I will now make it a practice of disclosing positions in any securities mentioned in my posts. If there is no disclosure, this means I do not have a position in any of the securities I reference, as is the case with BBH today.]


Anonymous said...

both the BBH and BTK are just above their August lows. only difference is that the BTK dropped sharply below the August lows in March (and made a bigger bounce back up ) while the BBH just probed below it (and made a minor bounce back up.)


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