Trading Nation

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

Biotech's big run
Biotech's big run

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."