Big ETF sees epic bounce, and the best could still be ahead

Biotech stocks are enjoying a bionic bounce this year.

Through Thursday's close, the iShares NASDAQ Biotechnology ETF (IBB) is up more than 12 percent year to date. This makes it the best performer among all the world's large-cap ETFs (that is, those with market capitalizations greater than $5 billion), according to data from FactSet.

This great start to 2017 follows a wretched 2016, in which the ETF fell more than 21 percent due in part to highly publicized concerns over drug pricing.

Looking forward, Oppenheimer technical analyst Ari Wald advises that investors "buy biotech," calling the IBB one of his favorite trade ideas.

"It's building momentum, and the trend's improving," he said Thursday on CNBC's "Power Lunch."

The ETF, which closed Thursday trading at $298.73, "has been pinned below this $300 level, and we think it's setting up for a breakout to new highs here."

"On that breakout, we see upside to $350," Wald said. That would represent a 17 percent rally from current levels.

Taking the other side of the trade, Max Wolff of 55 Capital doesn't see a lot of upside in the near-term, due to the magnitude of its recent run, as well as building uncertainty about health-care policy.

"Short-term, this looks a little bit out over its skis, and when you're moving fast and you get out over your skis, sometimes you don't stick the dismount," Wolff said Thursday on "Power Lunch."


Trades to Watch

Trader Bios


Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

Read more