Biotech ETF Outperforms

As the market suffered with a bought of anxiety disorder last week the shares of the iShares NASDAQ Biotech ETF (IBB) continued its climb higher and finished the week at the best level ever.

The ETF is now up over 26% in 2013 after a gain of 4% on Friday. The basket of 120 stocks has been a solid outperformer of the market since it began its lastest uptrend in November 2012.

The top ten holdings make up 60% of the portfolio, suggesting there is a concentration in the top stocks. Regeneron Pharmaceuticals (REGN) is the number one holding, making up 9% of the portfolio. Gilead Sciences (GILD) and Amgen (AMGN) round out the top three that account for 25% of the ETF. The fact all three are hitting new all-time highs this month is a big factor behind the performance of IBB.

The ETF could be considered overvalued in the short-term, however the outlook remains bullish for the biotech stocks and the overall health care sector. Potential buyers should wait for a pullback to the $165 area to increase the odds of a good reward-to-risk setup.