Healthcare Heavy:
Not much has changed for the diverse healthcare sector, as it still is the “worst” (still higher by 3.5%) performing major S&P sector on a YTD basis by a wide margin. It is even being outshined by the lagging energy and materials groups too. The XLV is trading just 7% off most recent 52 week highs, but other spaces are dragging with the XBI down 18% off its own recent peak. The biotech ETF is lower 5 of the last 6 weeks, but is making a stand here at the round 80 number. Both its 50 and 200 day SMAs are pointing lower and it has the look of a bearish rounding top if it slices underneath the 80 figure. Below is the ratio chart of the XLV against the S&P 500. The providers have given it a push higher over the last month, and if biotech can get its act together a downtrend could be decisively broken.
Equipment Redemption:
The medical equipment group is often thought of a reliable space within healthcare. The best names will normally pay a decent dividend and the trajectory of price charts will show a bit more stability, compared to the higher beta biotech cousins. Below is the ratio chart of the medical equipment ETF, the IHI, in relation the the biotech XBI. There was certainly indecision on the group as a whole between January and March, but they have made a nice push higher since. Whether it is a function of the biotechs lagging, or not, give credit to the resurgent subsector.
Examples:
Trends are more likely to persist than reverse, and that goes for the upside or downside. Below is a good example of that with the chart of TEVA and how it was profiled in our 4/10 Healthcare Report. The sector has been a laggard overall, but this name is really weak now 54% off most recent 52 week highs. Peers in the space are acting poorly too, a sign that is a positive for market participants that are short the arena. Namely MYL and PRGO are both 54 and 38% off their respective recent peaks. Today was just the fourth session that TEVA rose in the month of May.