Group Overview:
- Concerning overall has been the resurgence of the "defensive" groups recently, and that is best witnessed by the staples which are the best performing group on a one, three AND six month time period. Healthcare is thought of as conservative in nature too and on a 6 month look back it is the second best major S&P actor. Below is the ratio chart of the XLV:SPX and one does not have to be a genius to see how it has behaved. The two largest components in the XLV, being JNJ and PFE which make up nearly 20% of the ETF have nice chart complexions. JNJ sits just 4% off its most recent all time highs and has carved out a good looking cup with handle pattern with a 143.23 trigger of in a base that began back in January. It sports a dividend yield of 2.6% and short interest is less than 1%! PFE is digesting a recent 10 of 11 week winning streak between weeks ending 7/27-10/5, and it trades now just 5% off most recent all time highs. Its dividend yield of 3.2% is respectable too and both of these offer nice capital appreciation as well. Certainly not a bad place to park some capital.
"The Four Horseman":
- The performance of the prior big "Four Horseman" in healthcare has not been much to get excited about. Below shows a chart comparing them since late January this year. Clearly CELG has been the laggard as it trades 33% off most recent 52 week highs, but its chart has been in retreat since a 4 week losing streak that sank 36% between the weeks ending 10/6-27/17. More recently it registered a 4 week losing streak, the weeks ending between 10/5-26, that fell by 20%. AMGN has easily put in the best showing and has enjoyed 200 day SMA support the last couple weeks (the only one of the four that has an upward sloping 200 day). For me there is really nothing much to do for either of these, although if I was asked I would say BIIB looks the lost attractive. On 10/26 it recorded a bullish engulfing pattern right after a successful gap fill at the very round 300 figure from the 7/5 session. It reclaimed its 200 day SMA and it is still premature but a double bottom is taking shape.
Examples:
- The healthcare group acted a bit frail like everything else recently, pun intended. The IHI has held up better relatively than the more volatile IBB, as it is lower by just 9% from most recent 52 week highs compared to the biotech ETF which now trades 12% off its own highs. The IHI advanced 3.4% last week, its best weekly gain since the week ending 3/9 that jumped 5.6%. Volume was much more robust last week as it cut short a 4 week losing streak that lost nearly a combined 12%. Below is a name in the space and it shows how it is holding a long WEEKLY cup base breakout from a 52.58 cup base trigger in a pattern almost one and a half years in duration. It is currently retesting that breakout, and give it credit for not falling below it and notice the volume on the retreat has been subdued following the massive move the last week in August this year. The suggested entry still has not been hit and investors may want to wait until the earnings report on Wednesday after the close.
Special Situations:
Fourth time breaking above 200 day SMA was the charm, and 50 day SMA now sloping higher too. ARRY is a bio pharma play higher by 29% YTD and 48% over the last one year period. Earnings have been well received with gains of 4.2, 5.5 and 15.5% on 10/30, 5/10 and 2/6 and a loss of 2.6% on 8/14. The stock is higher just 2 of the last 4 weeks, but all CLOSED in upper half of weekly range and nice gains of 10.9 and 13.1% weeks ending 10/19 and 11/2. Enter ARRY here with pullback into 200 day SMA, which is sloping upward, and add to through cup base trigger of 20.31. Unable to CLOSE above very round 20 number on 6/20-21.
Trigger ARRY here. Stop 15.
Peer BDX ended off 5 week losing streak last week and fighting with its own 200 day SMA. VAR is a medical devices name higher by 9% YTD and 14% over the last one year period and sports a dividend yield of 1%, Earnings have been mixed with gains of 7.7 and 12.3% on 10/24 and 1/25 and losses of 2.2 and 7.4% on 7/26 and 4/26. The stock is higher the last 2 weeks by a combined 15%, and each of the two were accompanied by the second and third largest weekly volume in all of 2018. It produced two powerful gap ups in October and look to enter VAR on pullback into rising 200 day SMA at 119. Respect how last earnings gap was comforted by its 50 day SMA.
Trigger VAR 119. Stop 116.50.
Advanced 17 of the last 25 weeks. XLRN is a bio pharma play higher by 27% YTD and 46% over the last one year period. Earnings have been mixed with gains of 5.5 and .7% on 10/31 and 5/9 and losses of 1.4 and 3.7% on 8/3 and 2/28. The stock is higher 2 of the last 3 weeks, with all three CLOSING in the upper half of the weekly range. The week ending 6/29 screamed higher by nearly 30% in the best weekly volume in the last 5 years after positive results from its blood disorder drugs. It has formed a base on base pattern as it broke above a 50.10 cup base trigger on 8/29 and has formed another one with a 59.69 trigger. Enter XLRN here first after a recent reclaim of its 50 day SMA.
Trigger XLRN here. Stop 51.
Traded back in single digits last summer briefly. STAA is a medical devices play higher by 183% YTD and 248% over the last one year period. Earnings momentum is clearly gaining steam with three consecutive positive reactions adding 6.1, 21.5 and 26.3% on 11/1, 8/2 and 5/3 after a loss of 7.6% on 3/1. The stock rose 15.5% last week, putting an end to a 4 week losing streak that fell more that 22%. It put up a very impressive streak gaining 16 of 20 weeks ending between 5/4-9/14 that traveled from 16-54. It now rests 18% off most recent 52 week highs and enter STAA with a buy stop above its 50 day SMA at 45 and add to through a cup base trigger of 54.10.
Trigger STAA 45. Stop 43.
Not keeping pace with peers MDT and ABT. ZBH is a medical device player lower by 4% YTD and higher by 6% over the last one year period and sports a dividend yield of .8%. Earnings have been mixed with gains of 7.8 and 4.1% on 7/27 and 4/26 and losses of 5.7 and 1.1% on 10/26 and 1/30. The stock has declined 3 of the last 5 weeks, with all 5 CLOSING in the lower half of the weekly range and it now sits 14% off most recent 52 week highs. It is now well below the 128.48 cup with handle trigger it took out on 9/13 in a 9 month pattern. It broke below a bearish head and shoulders pattern with the neckline aligning with the round 120 number and now has formed a bear flag with resistance at 200 day SMA. Short with sell stop below 113.75 which carries a measured move to very round par figure.
Trigger ZBH 113.75. Buy stop 118.
Good luck.
Trigger summaries:
Buy after recent reclaim above upward sloping 200 day SMA ARRY here. Stop 15.
Buy pullback into 200 day SMA VAR 119. Stop 116.50.
Buy after recent reclaim of 50 day SMA XLRN here. Stop 51.
Buy stop above 50 day SMA STAA 45. Stop 43.
Sell stop to short below bear flag ZBH 113.75. Buy stop 118.
Group Overview:
- Concerning overall has been the resurgence of the "defensive" groups recently, and that is best witnessed by the staples which are the best performing group on a one, three AND six month time period. Healthcare is thought of as conservative in nature too and on a 6 month look back it is the second best major S&P actor. Below is the ratio chart of the XLV:SPX and one does not have to be a genius to see how it has behaved. The two largest components in the XLV, being JNJ and PFE which make up nearly 20% of the ETF have nice chart complexions. JNJ sits just 4% off its most recent all time highs and has carved out a good looking cup with handle pattern with a 143.23 trigger of in a base that began back in January. It sports a dividend yield of 2.6% and short interest is less than 1%! PFE is digesting a recent 10 of 11 week winning streak between weeks ending 7/27-10/5, and it trades now just 5% off most recent all time highs. Its dividend yield of 3.2% is respectable too and both of these offer nice capital appreciation as well. Certainly not a bad place to park some capital.
"The Four Horseman":
- The performance of the prior big "Four Horseman" in healthcare has not been much to get excited about. Below shows a chart comparing them since late January this year. Clearly CELG has been the laggard as it trades 33% off most recent 52 week highs, but its chart has been in retreat since a 4 week losing streak that sank 36% between the weeks ending 10/6-27/17. More recently it registered a 4 week losing streak, the weeks ending between 10/5-26, that fell by 20%. AMGN has easily put in the best showing and has enjoyed 200 day SMA support the last couple weeks (the only one of the four that has an upward sloping 200 day). For me there is really nothing much to do for either of these, although if I was asked I would say BIIB looks the lost attractive. On 10/26 it recorded a bullish engulfing pattern right after a successful gap fill at the very round 300 figure from the 7/5 session. It reclaimed its 200 day SMA and it is still premature but a double bottom is taking shape.
Examples:
- The healthcare group acted a bit frail like everything else recently, pun intended. The IHI has held up better relatively than the more volatile IBB, as it is lower by just 9% from most recent 52 week highs compared to the biotech ETF which now trades 12% off its own highs. The IHI advanced 3.4% last week, its best weekly gain since the week ending 3/9 that jumped 5.6%. Volume was much more robust last week as it cut short a 4 week losing streak that lost nearly a combined 12%. Below is a name in the space and it shows how it is holding a long WEEKLY cup base breakout from a 52.58 cup base trigger in a pattern almost one and a half years in duration. It is currently retesting that breakout, and give it credit for not falling below it and notice the volume on the retreat has been subdued following the massive move the last week in August this year. The suggested entry still has not been hit and investors may want to wait until the earnings report on Wednesday after the close.
Special Situations:
Fourth time breaking above 200 day SMA was the charm, and 50 day SMA now sloping higher too. ARRY is a bio pharma play higher by 29% YTD and 48% over the last one year period. Earnings have been well received with gains of 4.2, 5.5 and 15.5% on 10/30, 5/10 and 2/6 and a loss of 2.6% on 8/14. The stock is higher just 2 of the last 4 weeks, but all CLOSED in upper half of weekly range and nice gains of 10.9 and 13.1% weeks ending 10/19 and 11/2. Enter ARRY here with pullback into 200 day SMA, which is sloping upward, and add to through cup base trigger of 20.31. Unable to CLOSE above very round 20 number on 6/20-21.
Trigger ARRY here. Stop 15.
Peer BDX ended off 5 week losing streak last week and fighting with its own 200 day SMA. VAR is a medical devices name higher by 9% YTD and 14% over the last one year period and sports a dividend yield of 1%, Earnings have been mixed with gains of 7.7 and 12.3% on 10/24 and 1/25 and losses of 2.2 and 7.4% on 7/26 and 4/26. The stock is higher the last 2 weeks by a combined 15%, and each of the two were accompanied by the second and third largest weekly volume in all of 2018. It produced two powerful gap ups in October and look to enter VAR on pullback into rising 200 day SMA at 119. Respect how last earnings gap was comforted by its 50 day SMA.
Trigger VAR 119. Stop 116.50.
Advanced 17 of the last 25 weeks. XLRN is a bio pharma play higher by 27% YTD and 46% over the last one year period. Earnings have been mixed with gains of 5.5 and .7% on 10/31 and 5/9 and losses of 1.4 and 3.7% on 8/3 and 2/28. The stock is higher 2 of the last 3 weeks, with all three CLOSING in the upper half of the weekly range. The week ending 6/29 screamed higher by nearly 30% in the best weekly volume in the last 5 years after positive results from its blood disorder drugs. It has formed a base on base pattern as it broke above a 50.10 cup base trigger on 8/29 and has formed another one with a 59.69 trigger. Enter XLRN here first after a recent reclaim of its 50 day SMA.
Trigger XLRN here. Stop 51.
Traded back in single digits last summer briefly. STAA is a medical devices play higher by 183% YTD and 248% over the last one year period. Earnings momentum is clearly gaining steam with three consecutive positive reactions adding 6.1, 21.5 and 26.3% on 11/1, 8/2 and 5/3 after a loss of 7.6% on 3/1. The stock rose 15.5% last week, putting an end to a 4 week losing streak that fell more that 22%. It put up a very impressive streak gaining 16 of 20 weeks ending between 5/4-9/14 that traveled from 16-54. It now rests 18% off most recent 52 week highs and enter STAA with a buy stop above its 50 day SMA at 45 and add to through a cup base trigger of 54.10.
Trigger STAA 45. Stop 43.
Not keeping pace with peers MDT and ABT. ZBH is a medical device player lower by 4% YTD and higher by 6% over the last one year period and sports a dividend yield of .8%. Earnings have been mixed with gains of 7.8 and 4.1% on 7/27 and 4/26 and losses of 5.7 and 1.1% on 10/26 and 1/30. The stock has declined 3 of the last 5 weeks, with all 5 CLOSING in the lower half of the weekly range and it now sits 14% off most recent 52 week highs. It is now well below the 128.48 cup with handle trigger it took out on 9/13 in a 9 month pattern. It broke below a bearish head and shoulders pattern with the neckline aligning with the round 120 number and now has formed a bear flag with resistance at 200 day SMA. Short with sell stop below 113.75 which carries a measured move to very round par figure.
Trigger ZBH 113.75. Buy stop 118.
Good luck.
Trigger summaries:
Buy after recent reclaim above upward sloping 200 day SMA ARRY here. Stop 15.
Buy pullback into 200 day SMA VAR 119. Stop 116.50.
Buy after recent reclaim of 50 day SMA XLRN here. Stop 51.
Buy stop above 50 day SMA STAA 45. Stop 43.
Sell stop to short below bear flag ZBH 113.75. Buy stop 118.