Tech Funds Build Bases
The tradable tech
and biotech funds put in constructive gains Friday, but the
financial Spider slid to its lowest close in seven sessions.
Who would dispute techs a shot at reasserting leadership?
But I’d feel better about the long side if financials would
give us a nice, bullish breakout.
Exchange-Traded
Funds
The Merrill Lynch
Biotech HOLDR
(
BBH |
Quote |
Chart |
News |
PowerRating) rose 4%, the day’s biggest gain
among the exchange-traded funds. This fund represents a
basket of 20 biotech stocks, including positions in Amgen
(
AMGN |
Quote |
Chart |
News |
PowerRating),
Genentech
(
DNA |
Quote |
Chart |
News |
PowerRating), Biogen
(
BGEN |
Quote |
Chart |
News |
PowerRating), Immunex
(
IMNX |
Quote |
Chart |
News |
PowerRating),
PE Corp-PE Biosystems Group
(
PEB |
Quote |
Chart |
News |
PowerRating), MedImmune
(
MEDI |
Quote |
Chart |
News |
PowerRating),
Chiron
(
CHIR |
Quote |
Chart |
News |
PowerRating), Genzyme
(
GENZ |
Quote |
Chart |
News |
PowerRating), Gilead Sciences
(
GILD |
Quote |
Chart |
News |
PowerRating),
and Sepracor
(
SEPR |
Quote |
Chart |
News |
PowerRating).
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The Biotech HOLDR
gave a nice bottoming sign on May 24 (see Point A on the
chart), when it reversed off the low on strong volume and
closed at the high of day’s trading range.
For those of you
who trade off low bases, the Biotech HOLDR is forming a
handle off the right side of a correction-recovery pattern.
The pivot point is the high of the handle at 164 1/2 (see
Point B).
As an
intermediate-term momentum trader, I prefer to go long off
correction-recovery patterns only after a stock has managed
to make up at least half the point loss of the recent
correction. The Biotech HOLDR won’t reach that level until
it reaches 179 a share. It closed at 160 on Friday.
The new
Semiconductor HOLDR
(
SMH |
Quote |
Chart |
News |
PowerRating), which began trading May 5 on
the American Stock Exchange, climbed 1.9%. The fund is
consolidating nicely after a strong run from a May 24 low of
71 7/16.
This HOLDR’s
component stocks include Intel
(
INTC |
Quote |
Chart |
News |
PowerRating), Texas
Instruments
(
TXN |
Quote |
Chart |
News |
PowerRating), Applied Materials
(
AMAT |
Quote |
Chart |
News |
PowerRating),
Broadcom
(
BRCM |
Quote |
Chart |
News |
PowerRating), Micron Technology
(
MU |
Quote |
Chart |
News |
PowerRating), Analog
Devices
(
ADI |
Quote |
Chart |
News |
PowerRating), Xilinx
(
XLNX |
Quote |
Chart |
News |
PowerRating), Maxim Integrated
Products
(
MXIM |
Quote |
Chart |
News |
PowerRating), LSI Logic Group
(
LSI |
Quote |
Chart |
News |
PowerRating), and
Teradyne
(
TER |
Quote |
Chart |
News |
PowerRating).
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The Pharmaceutical
HOLDR
(
PPH |
Quote |
Chart |
News |
PowerRating) added 1.1% but fell back from resistance at
its 50-day moving average. This HOLDR’s component stocks
include Merck
(
MRK |
Quote |
Chart |
News |
PowerRating), Pfizer
(
PFE |
Quote |
Chart |
News |
PowerRating), Johnson &
Johnson
(
JNJ |
Quote |
Chart |
News |
PowerRating), Bristol-Meyers Squibb
(
BMY |
Quote |
Chart |
News |
PowerRating), Eli
Lilly
(
LLY |
Quote |
Chart |
News |
PowerRating), Warner-Lambert
(
WLA |
Quote |
Chart |
News |
PowerRating), Schering-Plough
(
SGP |
Quote |
Chart |
News |
PowerRating),
American Home Products
(
AHP |
Quote |
Chart |
News |
PowerRating), and Abbott Laboratories
(
ABT |
Quote |
Chart |
News |
PowerRating).
The Financial SPDR
(
XLF |
Quote |
Chart |
News |
PowerRating), which tracks the financial stocks in the S&P
500, lost 1.7%, the biggest loss among the tradable funds.
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The
Cyclicals/Transportation SPDR
(
XLY |
Quote |
Chart |
News |
PowerRating) headed lower and is
threatening support.
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