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October 21, 2009 (FinancialWire) (By Frank Kollar) -- Shares of Biotech HOLDRS (AMEX: BBH | Quote | Chart | News | PowerRating) fell dramatically on Tuesday, Oct 20, and are nearing a support level that cannot be broken if the advance is to continue.
Biotech HOLDRS reached a rally high in early August and has since been trading sideways, with ever lower highs in two rally attempts. Biotech HOLDRS has also had several higher daily lows. This creates a pennant pattern with a declining resistance line and rising support line.
Typically, pennants resolve to the original direction of the trend, in this case to the upside. But Tuesday's declines take shares close to that rising support line.
A close below $98.00 a share would likely result in continued declines in coming weeks. If support holds, we could then look for another test of the prior rally highs.
The Fibtimer.com (http://www.fibtimer.com) ETF Timing Strategy holds a position in Biotech HOLDRS.
Frank Kollar has been timing the financial markets since 1982, with online service since 1996. He is a dedicated trend timer and his strategies exited the markets before the crash in 1987 as well as the bear market in 2000 through 2002. During the 2000-2002 bear market, his bearish positions resulted in gains exceeding 100 percent, all achieved by trading trends.
Kollar's research has shown that the financial markets are in tradable trends approximately 80 percent of the time. FibTimer strategies define trends and trade them in both advancing and declining markets. Caring nothing about what newscasters say or what the latest economic indicator predicts, trends are where the profits are, and that is where FibTimer is.
Kollar is editor and chief analyst at FibTimer.com (http://www.fibtimer.com) which offers market timing strategies for S&P and Nasdaq index fund traders, as well as bond, gold, small cap, sector, ETF and stock trading strategies.
FinancialWire(tm) is a fully independent, proprietary news wire service. FinancialWire(tm) is not a press release service, and receives no compensation for its news, opinions or distributions. Further disclosure is at the FinancialWire(tm) web site (http://www.financialwire.net/disclosures.php). Contact FinancialWire(tm) directly via inquiries@financialwire.net.
Free annual reports for companies mentioned in the news are available through the Free Annual Reports Service (http://investrend.ar.wilink.com/?level=279).
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