HEALTHCARE AND PAPERS BEING SOLD -- NEWMONT MINING TESTING SUPPORT
CUTTING PAPER PROFITS... The Paper and Forest Product Index is falling to a three-month low today. It's green relative strength line has been holding up pretty well since the October bottom. But it may start rolling over. The daily MACD lines turned negative a month ago -- giving an earlier signal of problems in this group. Two of the day's biggest paper losers are Georgia Pacific and MeadWestvaco. Earlier in the week we talked about the rally in commodities looking overbought and vulnerable to a setback. That may explain some selling in commodity-related groups like this one.
Chart 1
GP AND MWV LEAD PAPER GROUP LOWER... Both stocks broke their 50-day averages weeks ago -- and both have now dropped to a new three-month low. GP's relative strength line has been flat for three-months and is may be turning lower. The rising price relative line for MWV has already broken its support line.
Chart 2
Chart 3
HEALTHCARE LOOKS SICK... Healthcare stocks aren't as healthy as they used to be. Two examples of today's selling can be seen in the charts of Forest Labs and Aetna. FRX is breaking its December lows to complete a "double top" reversal pattern. It's now headed for a test of its 200-day average. Aetna has held up relatively well -- until now. The health insurer has slipped under both moving average lines. That's usually a sign of more weakness to come. Chart 6 provides a picture of the healthcare stocks as a group. It's a sick picture. After peaking last April, the Morgan Stanley Health Care Provider Index is falling to another 52-week low.
Chart 4
Chart 5
Chart 6
NEWMONT TESTING SUPPORT... Gold stocks (along with gold) have been correcting for the past week. Newmong Mining recently failed a test of major overhead resistance just above 30 -- and is now pressuring initial chart support along its December low and 200-day moving average. We're watching the action is this influential gold stock very closely. Any decisive break of that support level would signal a bigger turn for the worst in the entire group. Although our short-term view on gold and gold stocks has turned more cautious, we remain bullish on the major trend.
Chart 7
