Healthcare On Life Support:
We frequently like to mention that trends are much more likely to remain in place than to reverse. Of course the trend is your friend, and that can be to that downside obviously as well. The chart of the XLV below shows it is right back to its short bull flag breakout one month ago, and that is not what bulls want to see. We know the best breakouts tend to work out right away and this one has been retested twice already. It still remains the “worst” performing major S&P sector, higher by 7.4%. But true to form it is near the bottom of the leaderboard for the major groups on a one week and one month timeframe. Last week the XLV fell 1.4% as the S&P 500 rose .8%.
Providing Relief:
The healthcare provider names have come to life recently. Last week the IHF recorded its second best weekly gain of ’19 rising 4.8% in active volume. That weekly return was only outdone by the 7.1% gain the week ending 4/26, which ignited this run which has added ground 8 of the last 12 weeks, and three of the down weeks CLOSED in the upper half of the weekly range. UNH, the largest component of the ETF, rose 7.7% last week, and is higher yet again this week fractionally. ANTM the second biggest holding (the top 2 make up 36% of the fund), is just 4% off most recent 52 week highs and just broke above a cup with handle pivot of 294.96 taken out on 7/11. The round 300 number there should provide a floor going forward.
Examples:
The medical device plays continue to work in the soft healthcare space. The IHI is higher by more than 21% YTD and has acted well POST breakout from a 234.09 cup base pivot from 6/10 and currently sits just 1% off most recent 52 week highs. We can talk to a number of leaders in the space, and today we will focus on MDT, and how it appeared in our 6/20 Healthcare Report. This one has been a lesson in patience, and respecting the stop price on a CLOSING basis. The 99 pivot was taken out on 6/20, but the 96 stop was not undercut. Today it took out the very round par number and look for a grind higher to the 108 target.