Guilty Until Proven Innocent:
When you are trying to succeed be aware of the company you keep. Relating to the stock market that means putting your capital to work in names and areas that are proven and deserve it. The analogy I like to use is if you want to win the World Series you are going to put your all-stars on the field, not your triple AAA players. Looking at the healthcare space with a few weeks left in 2024, the XLV is in the cellar, the worst actor of the 11 major S&P sectors on a YTD basis, albeit still higher. All rallies within the space should be viewed as suspect until further notice. This will be a stock pickers game, as technicians always believe it is, but the odds may be stacked against them. As a rising tide tends to lift all boats, the opposite is true as well. But will investors start to take a look at this beaten-down group with a new regime in place? The first place to look is for individual names that demonstrated relative strength in 2024. And although these names are in the penalty box maybe they have paid their dues, but keep a tight leash (stop) as always as their trust must be earned. The daily chart below of the very diverse XLV paints a pessimistic picture.