We find it rather interesting that the laggard Biotechnology group and the Biotechnology ETF (BBH) in particular have begun to find sponsorship; and it is our opinion that BBH is set to embark upon a period of both absolute and relative out-performance. Quite simply, BBH is forming a rather large and bullish consolidation, which implies prices will move above previous high resistance at $103.50 - a level that has proved for weakness in the past. But the prime reason we should consider long positions is that the 400-day moving average has held, while the longer-dated 40-day stochastic is bottoming in bullish fashion.
From a trading perspective, we would look to buy weakness as it develops in the days ahead. The four largest stocks in the index are Amgen (AMGN), Biogen (BIIB), Gilead (GILD) and Genzyme (GENZ). We have our opinions about the individual shares, and needless to say that AMGN isn't at the top of our list. Those looking to perhaps out-perform BBH...should choose a combination of GENZ and GILD and perhaps some of the other junior shares.
The fact of the matter is Biotechnology is going higher; choose your vehicle carefully.
