Somebody asked me if I thought healthcare was looking bullish. I took a look at the weekly chart for the S&P Healthcare index, and here are my thoughts:
- Downtrend is on the cusp of breaking, but has NOT broken yet – note the lower highs and lows, along with a trendline challenged but not broken. The sector remains below its 40 week (200 day) MA.
- MACD is showing some positive movement—which is a longer termed momentum indicator.
- Despite the recent strength on the sector, it’s not yet outperforming the broader S&P 500 index, as evidenced by the comparative strength study (middle pane)
- Near termed momentum is bullish but approaching overbought.
Not shown on this chart is moneyflow- as the S&P index charts don’t report volume for the sector. However, I note that some of the ETF’s following the index are seeing positive moneyflow lately. That’s to be expected given the recent rally.
I’d take a position in this index through a good ETF or a well-chosen stock or two IF we see a definitive break of the downtrend and continued positive moneyflow on the ETF or stock chosen. I’d ideally like to see comparative strength pick up vs. the broad markets. That could be a thorn in the sectors side. The sector isn’t yet ready to buy—but it’s getting closer. Keep an eye on this one.
Keith on BNN Television today: Monday April 18th at 1:00pm
I am on BNN today for the 1:00pm show.
If you wish to phone in with questions on stocks for me during the live taping (1pm – 2pm) , you can CALL TOLL-FREE 1-855-326-6266.