From First To Worst:
Healthcare is still the worst behaved group thus far in 2019, after being the best actor in 2018. The XLV is still higher by more than 6% YTD, a respectable sum, but lagging groups like the staples and utilities puts into perspective the weak showing. The ETF is making lower highs and lows since the beginning of October last year, and the potential double bottom pattern that was developing is looking worse by the day. Volume trends remain poor, with one having to go back to December of ’17 to witness the last week of accumulation. By contrast weeks ending 10/12/18, 10/26/18, 12/21/18 and 3/8 all slumped by 3.4, 4.5, 7.1 and 3.8% in heavy volume. The cold the XLV is experiencing needs to be addressed or it could morph into something more.
David Prevailing Versus Goliath In Biotech:
The smaller, more nimble biotech plays have been faring better this year than their larger cap plays. This can be seen in the YTD performance comparing the XBI to the IBB. So far in 2019 the former is higher by 28%, and the IBB stuffed fat with the former big 4 names of GILD AMGN BIIB and CELG has gained 18%. Each of the four largest components in the IBB have a 7% weighting, while the more equitable XBI none having more than a 2% representation. The ratio chart below shows the XBI compared to the S&P 500, and it is signaling higher prices head.
The longer the base the greater the space is what the adage proclaims. If that is the case then the chart below of VCYT and how it was profiled in our 3/8 Healthcare Report could be ready for a special run. Earlier this year it broke to all time highs above a 5 year cup base pattern. On a shorter time frame it acted well POST breakout from a 15.60, and we know the best breakouts tend to work right away. From there it recently retested a bull flag breakout, and has recorded three straight WEEKLY CLOSES above the very round 20 number. Notice the name never came close to breaking below its 200 day SMA in the carnage late in ’18. A lot to like here.