David Versus Goliath:
With the emergence of the small caps recently, as the Russell 2000 gained more than 6% Monday, is it time to start looking at smaller cap healthcare names? The ratio chart below comparing the small cap PSCH to the larger cap XLV says it is still to be determined. But a break above the symmetrical triangle would suggest smaller caps should be overweighted within the space. On its PRICE chart, the PSCH trades in a very illiquid fashion, but a break above 120 would be very bullish for the group. It gives a good interpretation of what is going on, although I would focus my capital on names inside the ETF. There could be some mean reversion with the smaller names as the PSCH is now 16% off its most recent 52 week highs, while the XLV trades just 5% off its own yearly peak. The latter is doing battle with the very round par number, and has recorded some bearish candlesticks with an engulfing and dark cloud cover on 4/28 and 5/12 respectively.