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Stock futures higher, so are YIELDS

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Stock futures are higher this morning with S&P futures trading up 13 points, NASDAQ futures are higher by 42 and Dow futures are being bid up by 74 points. Fair value on the S&P 500 for today is $3.62. Computers are set for program buying at $5.02 and set for selling at $2.02.

Biotech HOLDRs bullish at 132

Last night I was e-mailing a fellow subscriber in Los Angeles about a friendly wager (a gentleman's bet, no money involved) on the Avalanche versus Kings game 7 hockey game. I'm writing this update at 8:30 PM EST Wednesday night and don't know the outcome of the game as it has yet to start. Long story short... the numbers 3 and 0 kept coming up in my e-mail and I quickly assumed the Avalanche would win Wednesday nights game 3-0 and move on toward the Stanley Cup. I also noticed that the Biotech HOLDRs (BBH) have been having some trouble at the 130 level (last two numbers are 3-0). Coincidence? I believe so, but look what happens to some technicals if the Biotech HOLDRs trade above 130 or better yet, 132.

Biotech HOLDRs - Weekly Interval

I've talked before about how relative lows and relative highs can often times come back into play. Short-term and longer-term traders can use this technique to ascertaining certain ranges. The above is perhaps an example of opportunity for both short and long-term traders looking for a technology group poised for a move. All I'm doing here is pointing out how in the past, relative lows at different time frames on the BBH really seemed to have had a far reaching affect on the security and probably the BTK.X itself. While 192 as a longer-term bullish target seems outlandish, it may still spell opportunity to the 150 level or even the 200-day MA. I'd challenge the BBH to trade 132 before getting long. Now, check this out and see if I'm crazy.

Biotech HOLDRs Chart - $2 box

The above chart is a little cluttered, but there is a "method to this madness." There are certain things in the weekly bar chart that give hint to the BBH moving higher on a break above $130. The point and figure chart also gives hint that a bullish trader might want to take a look on a break above $130 or a trade at $132. Sometimes, history has a way of repeating itself. Sometimes bearish and bullish counts have a habit of being achieved. While I'll be very surprised if the Avalanche win tonight' hockey game 3-0, I'll be less surprised if the BBH trades close to the $190 level at some point in the future. Place a stop at $114 at a minimum for longer-term traders. Heck, if the Kings get ahead 2-0 I don't think I'll win my bet.

Jeff Bailey
Senior Market Technician

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