Know Your Time Frame:
Healthcare continues to be the “worst” performing major S&P sector YTD, albeit it is higher by more than 8% via the XLV. However for those looking for a silver lining it is the best performing major S&P sector over the last one month timeframe, edging out the materials and real estate groups. The XLV is looking for its first three week winning streak in the last 6 months, to show how uneven the space has been. Tuesday the ETF broke above a bull flag pivot of 92, and the breakout carries a measured move to 97. Today demonstrated good follow through up nearly 1%, and it is important as we know the best breakouts tend to work right away. Focus on the leaders in the nascent strength within.
Silky, Smooth New Issue:
There has been plenty of news in the healthcare group concerning M&A activity. DHR and GE have been in talks for the latter’s biopharma business. HQY is acquiring WAGE, and last year witnessed some mega deals with CI buying ESRX and CVS swallowing AET. Amazon wanted a piece and bought Pillpack for $1 billion. This week saw PFE make an offer for ARRY, and should one expect this type of action to continue? No one knows, and is it a bullish sign that companies see value in peers, or is it a function of the depressed prices of many names in the group? Not only has there been plenty of M&A news, but IPOs continue to flood the market in the healthcare arena. The chart of SILK below looks attractive.
Examples:
The healthcare space has been anything but a leader in 2019, but when one can discover names that have been holding their own, or even outperforming in a firm capacity, once the group gets going again it could be one of the first to sprint out of the gate. Below is a possible example of NVCR and how it appeared in our 6/6 Healthcare Report. It currently trades right at all time highs, and did break above the 55.08 cup with handle pivot and has since risen another quick 10% plus. It has advanced 7 of the last 8 weeks, and this week is showing extraordinary power higher by 12% heading into Thursday.