Additionally, the technical picture supported the notion that prices were bottoming out. Today, EDV is receiving remarkable support at its 200-day long-term trendline; meanwhile, a "golden cross" by the 50-day moving average appears inevitable. Are there other reasons that investors seem to be bucking the conventional wisdom that rates had to go higher?
3. iShares Nasdaq Biotechnology (IBB). For years, I have been advocating non-cyclical sectors that are less-tied to interest rates. It has led to client ownership of funds like SPDR Select Healthcare (XLV), PowerShares Pharmaceuticals (PJP) and iShares Aerospace and Defense (ITA).
Yet, in spite of clear-cut relative strength in the ETF world, I have not chosen to board the biotech bandwagon in its purest form. Funds like SPDR Biotech (XBI) and IBB have defied gravity better than Sandra Bullock in a space suit.
Does it make sense to buy a sub-sector that has become so speculative that it now trades at a 60% premium to a fully valued market? Is it it sensible to embrace a sub-sector investment with a price-to-book (P/B) north of 11 and a trailing price-to-earnings (P/E) of 42? Or is the biotech boom showing characteristics like the dot-com mania in 1999?
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.
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