iShares Nasdaq Biotechnology Index (ETF) (NASDAQ:IBB) — This exchange-traded fund (ETF) tracks the NASDAQ Biotechnology Index. It invests 90% of its assets in stocks of the index and the remainder in futures, options and swap contracts of securities in the index.
As the prime ETF representative of one of the most successful sectors, its price is often quoted in financial publications. It was listed as the “Overall Five-Year Top Performer” of all ETFs by AAII in its September AAII Journal.
However, due to a recent investigation of the industry’s alleged “overpricing,” its one-year market return, through August 31, fell 17.76% (Morningstar). However, over three years, its NAV annualized total return is 13.3% and its five-year return is 24.1%. The top 10 holdings currently include: Amgen, Inc. (NASDAQ:AMGN), Biogen Inc (NASDAQ:BIIB), Celgene Corporation (NASDAQ:CELG), Gilead Sciences, Inc. (NASDAQ:GILD), Regeneron Pharmaceuticals Inc (NASDAQ:REGN), Illumina, Inc. (NASDAQ:ILMN), Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX), Mylan NV (NASDAQ:MYL), Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) and Shire PLC (ADR) (NASDAQ:SHPG). It charges a modest annual management fee of 0.47%, while its Morningstar rating is “4-star buy.”
Yesterday, IBB broke from a one-year bear market after establishing a triple bottom that marked a nine-month consolidation. The breakout was preceded by a Golden Cross (long-term buy signal), a CBR buy signal from my internal indicator and finally, yesterday, a break through its bearish resistance line along with a second CBR buy signal.
Accumulation has been higher than average since May, another indication of a solid bottom.
Buy IBB at $290 with a trading target of $345 for a projected return of more than 18%.