Biotech Fund Forges Ahead

June 6, 2000
Loren Fleckenstein

The
tradable tech funds pulled back Tuesday as most sectors gave some ground. The
biotech sector again proved the positive exception.

Hawkish words from San Francisco
Federal Reserve President Robert Parry stirred up a fresh bout of anxiety over
interest rates.

Exchange-Traded
Funds

The Biotech HOLDR
(
BBH |
Quote |
Chart |
News |
PowerRating) moved
higher, its second straight gain at a time when most of the tech funds were
either treading water or pulling back. Money is definitely seeking out stocks in
this sector even cash acting antsy about areas of the market.

For more technical analysis on
biotechs, check out Kevin
Marder’s column on Tuesday’s market.

The Nasdaq 100 Tracking Stock
(
QQQ |
Quote |
Chart |
News |
PowerRating)
lost 2.4%, closing a hair below its 50-day moving average.

The Energy SPDR
(
XLE |
Quote |
Chart |
News |
PowerRating) snapped back
3.9%.

Interest-rate fears helped drop the
Financial SPDR
(
XLF |
Quote |
Chart |
News |
PowerRating), which tracks the financial stocks in the S&P 500,
below the top of its prior base.

What was bad for rate-sensitive and
tech funds was good for the defensive Pharmaceutical HOLDR
(
PPH |
Quote |
Chart |
News |
PowerRating), which rose
1.5%. As an intermediate-term trader, I’d still keep hands off. The drug HOLDR
has made an obviously bearish change in character, having broken below its
50-day moving average after trading above the line ever since the newly issued
security had traded for the 50 days needed to calculate the average.

Stocks Behind the
Funds

Amgen
(
AMGN |
Quote |
Chart |
News |
PowerRating), the biggest of the
biotechs by market cap and revenue, has made the most progress toward recouping
the damage done in the industry’s bloodbath. The stock recently crossed above
its mid level of 63 1/4 as well as resistance defined by the May 16 session high
of 65 3/16.