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Biotech Bumble: ETFs Fall to 2014 Lows


More bad price action out of the biotechnology sector Thursday and that underscores the precarious technical conditions being faced some exchange traded funds that were beloved just several weeks ago.

Here is a brief recap of just how bad biotech stocks and ETFs have been since the end of February: Entering Thursday’s session, the BEST of the five biotech ETFs since the end of February has been the First Trust NYSE Arca Biotechnology Index Fund (FBT) with a loss in excess of 8%. [New High ETFs Paint Picture of Skittish Market]

And this factoid highlights just how poorly the major biotech ETFs are acting Thursday. The PowerShares Dynamic Biotechnology & Genome Portfolio (PBE) is the best performer of the five, down 5.2%.

The iShares Nasdaq Biotechnology ETF (IBB) , the largest biotech ETF by assets, is lower by  5.5% on volume that is nearly a third above the ETF’s daily average. IBB is flirting with a close below $222, something it has not done since December 2013. [Biotech ETFs Flirt With Trouble]

There is talk that IBB is forming an ominous Eifel Tower technical pattern, which include washout selling that would erase much of the ETF’s previous rally. IBB was one of the top-10 non-leveraged sector ETFs in each of the past three years.

As for the equal weight SPDR S&P Biotech ETF (XBI) , the second-largest biotech ETF behind IBB, that fund is down 6% today on heavy volume and the technical situation is not encouraging.

“Neckline kiss of resistance taking place this morning? Bio Tech ETF XBI could be kissing the underside of neckline resistance and pushing lower. Is this a head and shoulders top? Jury is still out for sure. If so….be careful, as downside momentum often picks up speed here,” writes Chris Kimble of Kimble Charting Solutions.

There is one ETF benefiting from the biotech blues: The ProShares Ultrashort Nasdaq Biotechnology (BIS) . BIS is attempts to deliver twice the daily inverse performance of the Nasdaq Biotechnology Index, IBB’s underlying index.

BIS is up more than 10% in the past week. Since the start of March, investors have put nearly $28 million into the ETF, an impressive sum considering BIS had less than $7.8 million in assets under management at the end of last year. [Invesrse Biotech ETF Suddenly Hot]

iShares Nasdaq Biotechnology ETF