Biotech Strength In Weak Market
Another bout of selling in tech and
financials took down the vast majority of tradable funds Tuesday. The Biotech
HOLDR showed strength in an otherwise weak market. Continued anxiety over
earnings growth sent money into defensive stocks, lifting pharmaceutical and
consumer staples funds.
The Biotech HOLDR
(
BBH |
Quote |
Chart |
News |
PowerRating) gained
2.5%, following through for its third straight gain. It was the sharpest price
rise for the day among the exchange-traded
funds. Among its components, Human Genome Sciences
(
HGSI |
Quote |
Chart |
News |
PowerRating)
rose 6.5%, Genzyme
(
GENZ |
Quote |
Chart |
News |
PowerRating) 3.4%, Alkermes
(
ALKS |
Quote |
Chart |
News |
PowerRating) 5.8%.
Human Genome cleared a 14-week base.
Watch out though, those of you who play breakouts for the intermediate-term
trade. We’re in a bear market until proven otherwise. And breakouts, as Kevin
Marder points out in his latest commentary,
have a high failure rate in a weak market.
In the defense arena, the Dow Jones
U.S. Healthcare iShares
(
IYH |
Quote |
Chart |
News |
PowerRating) added 1.5%, the Utilities SPDR
(
XLU |
Quote |
Chart |
News |
PowerRating) 1.3%,
the Consumer Staples SPDR
(
XLP |
Quote |
Chart |
News |
PowerRating) 0.9%, the Pharmaceutical HOLDR
(
PPH |
Quote |
Chart |
News |
PowerRating)
0.8%.
On the downside, the Internet HOLDR
(
HHH |
Quote |
Chart |
News |
PowerRating)
tumbled 12.5%, hit by components America Online
(
AOL |
Quote |
Chart |
News |
PowerRating), which dived 17.1%,
and Yahoo
(
YHOO |
Quote |
Chart |
News |
PowerRating) down 11.4%.
The Semiconductor HOLDR
(
SMH |
Quote |
Chart |
News |
PowerRating)
5.4%. Among its components, Micron Technology
(
MU |
Quote |
Chart |
News |
PowerRating), the biggest U.S. maker of
memory chips, fell 13.9% on downgrades by Morgan Stanley Dean Witter and
PaineWebber.
While earnings fears are driving much
of the selling, the market has whacked stocks of companies reporting earnings
growth rates in excess of analyst expectations. For my technical take on this
climate, see my Trading
The News.
If you’re new to exchange-traded funds,
be sure to visit TradingMarkets’ Knowledge Center,
dedicated to explaining the basics of trading and active investing in ETFs and
mutual funds. Just click on the Funds tab
near the top of this page, then click on the Knowledge
Center tab.Â
You also will find lessons on trading
exchange-traded funds in the Stocks Education area of TradingMarkets.com. In
particular, check out my three-part series on trading ETFs, starting with
Average Crossovers. I also recommend newcomers read my tutorial,
HOLDRs: Unique Opportunity And Risk.