Since mid April healthcare is acting better when compared to the S&P 500 (as seen on the XLV chart below). Is that a good sign, or bad one? Depends on your bias, as bears would say that its outperformance is simply a reflection of investors taste for more defensive groups. Bulls just follow the price action, as they should, and the XLV has carved out an 8 month long symmetrical triangle, with a 15 handle width top to bottom. There is a cluster of evidence, something technicians call when a couple or more pivots align in the same area, giving more credence to the breakout, IF taken out. In the XLV’s example the 200 day SMA, the very round 90 number, and a symmetrical triangle pivot all occur at the same place. A breakout could prove very powerful.
No Fat Fingers Please:
Today we take a look at two very similar healthcare symbols, that both traveled in a very different trajectory. It would be imperative that when looking at a potential purchase one not misspell it. Here we will take a look at the chart of REGN, and in the next paragraph RGEN, and it was once a leader in its space, much like peers AMGN BIIB and GILD. REGN is a name that has encountered trouble since early March when it traded in the mid 400s. Fast forward to today and round number theory is making its presence felt, as the 300 number has held recently on a CLOSING basis until today. Four times since 5/13 it was beneath 300 intraday, and today as well, but every one of the sessions CLOSED above. It has the look of a bear flag formation with a measured move lower of 45 handles, if it breaks down.
When a stock demonstrates firm relative strength not only against a group, but is bucking the storm within a soft one, take notice. Below is an example of the chart of RGEN and how it appeared in our 5/22 Healthcare Report. It was holding strong near a double top last November at the round 70 number. Many sessions were above 70 intraday, but none CLOSED above the figure, until 5/28 and since then it has seen a nice move higher as it emerges from a bull flag pattern. It now trades right near all time highs as look for its march higher to continue.