June 26, 2009 (FinancialWire) — Dr. Joe Duarte (http://www.joe-duarte.com) recently noted: The Nasdaq Biotech ETF (NYSE: IBB) is acting fairly well in a tough market.

Duarte added: Biotech stocks have been out of the limelight for several years. Sure, some have done reasonably well. Others have been taken over and delivered one day bonanzas to patient shareholders. But, the 1990’s style steady up trend where the whole sector would rise in tandem on a nearly daily basis has been long gone.

And to be perfectly honest, those days are not likely to return anytime soon. There is just too much uncertainty involved in the sector. Competition, the threat for lower reimbursement for drugs, and the general uncertainty of the business have given invetstors pause in this area of the market for some time.

Yet, it’s hard to argue with the fact that IBB has slowly been building a base, where the sellers have been slowly shaken out, especially over the last nine months. Altogether, IBB has bottomed near 60, four times since October 2008. Since March, when the whole market bottomed, IBB has found support near 65 several times.

And while it’s only up some 17% since March, as the S&P 500 has been floundering of late, IBB has been slowly moving higher. This has been especially noticeable since the ACOG meeting a few weeks ago, where there was a fair amount of encouraging news on treatments for cancer, the major thrust of the biotech industry for the last several years.

What does it mean? Well, the bottom line is fairly clear. Money is moving into biotech. It’s hard to pick one or two reasons for it, other that maybe the business models of some of the companies are starting to click, and other mundane matters.

We do have a sneaky suspicion, though. There are still too many biotech companies, especially at the idea and concept level. Most of them, as in any business don’t have a prayer for survival. Yet, there are some that have pulled themselves above that level and that have decent potential for the development of future drugs.

Many of those companies are still living on other people’s money, and will do so for some time. Unless, and here’s where the big reason for liking IBB comes in, they are bought by bigger players.

Duarte’s conclusion: Our hunch is that we are getting close to a buying spree in biotech. And the best way to play such an event may be to own shares in IBB. For the short term, though, a move above $72 would be very bullish.

Make sense of today’s nonsense. Get Doctor Joe Duarte’s Market I.Q., at:

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Duarte partners with the Investors Resource Center at Investrend Information (http://www.investrendinformation.com).

Duarte’s IntelligentForecasts.com (http://www.intelligentforecasts.com) provides free news coverage and analysis, and his daily articles and news summaries offer recommendations and analysis for ETFs, and individual stocks in the technology, health and biotechnology, and energy sectors. Duarte has combined expertise in health care, energy, and the effects of politics and global intelligence on the financial markets offer a unique blend of insight and information to thousands of active investors and political and intelligence aficionados around the world on a daily basis.

He is the author of: Futures And Options For Dummies, Successful Energy Sector Investing, Successful Biotech Investing and co-author of After-Hours Trading Made Easy. In early 2001, in Successful Energy Sector Investing, he correctly predicted that Venezuela’s political problems could lead to an energy crisis in the United States. He has also appeared as a weekly guest on Market Mavens Radio and has logged appearances on KNX radio in Los Angeles, Financial Sense.com radio, and Wall Street Radio.

One of CNBC’s original Market Mavens, Dr. Duarte has been writing about the financial markets since 1990. His articles and commentary have been featured on CBS Marketwatch, Barron’s, Smart Money, Medical Economics, and in Technical Analysis of Stocks and Commodities magazines. In 2003, Doctor Duarte received second place, in the professional section, of the Medical Economics Investment Challenge with a 12-month return of 42%.

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