HEALTHCARE PROVIDERS INDEX SPRINGS INTO ACTION -- AETNA, HUMANA AND UNITEDHEALTH LEAD HMO REBOUND -- ITB SHOWS UPSIDE LEADERSHIP AHEAD OF KEY DATA -- SILVER GETS A BREAKOUT AND RESISTANCE TARGET -- BASE METALS FAIL TO FOLLOW PRECIOUS METALS

HEALTHCARE PROVIDERS INDEX SPRINGS INTO ACTION... Link for today's video. The HealthCare SPDR is the strongest of the nine sectors in the stock market right now. Despite being in the strongest sector, healthcare providers lagged the market and underperformed this year. This may be changing as the DJ US Healthcare Providers Index ($DJUSHP) springs to life with a sharp advance the last three days. Chart 1 shows the index in a long-term uptrend and within a few percent of its 52-week high, which was recorded in early January. The bounce over the last two weeks affirms support in the 850 area. The indicator window shows the price relative ($DJUSHP:$SPX ratio) turning up in mid October and breaking a trend line in late December. Even though this group has been lagging the healthcare sector, it is starting to outperform the market and make up for lost ground. Chart 2 shows daily bars with the index breaking out with a surge the last three days.

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Chart 1

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Chart 2

AETNA, HUMANA AND UNITEDHEALTH LEAD HMO REBOUND... HMOs are an important part of the DJ US Healthcare Index and stocks in this group also made big moves the last few days. The image below shows CandleGlance charts with the HealthCare SPDR and five HMO stocks. This CandleGlance feature is a great way to compare performance for stocks within a particular group. Chartists can also find these charts using our Sector Summary. Click the healthcare sector to see the group and click the group names to see the stocks within the group.

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Chart 3

Chart 4 shows Aetna (AET) finding support near the December lows and surging above the January trend line. Chart 5 shows Humana (HUM) firming near the 62% retracement from mid January to mid February and then surging above resistance with good volume on Friday. The stock followed through with another 2+ percent gain on Monday. Chart 5 shows Unitedhealth Group (UHN) finding support near the December low and breaking resistance with a big surge the last three days. Upside volume was above average on Friday, which is pretty good considering it was the Friday before a three day weekend. Even though all three stocks broke resistance with big moves, they are already short-term overbought and may need time to digest these gains.

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Chart 4

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Chart 5

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Chart 6

ITB SHOWS UPSIDE LEADERSHIP AHEAD OF KEY DATA... This week is important for housing stocks because housing starts and building permits for January will be reported on Wednesday. Expectations are not that high because of the cold weather, which dampen today's National Association of Homebuilders confidence gauge. Despite a wicked winter and a confidence drop, the Home Construction iShares (ITB) remains in an uptrend as it works its way higher the last six months. It is not the most exciting uptrend I have seen, but it is an uptrend and chartists can mark support at the January low.

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Chart 7

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Chart 8

Chart 8 shows daily candlesticks with the ETF opening strong and moving lower to trace out a filled candlestick so far today. Despite this intraday reversal, the overall trend is clearly up with the trend line zone and the January low marking support at 23. The indicator window shows the StockCharts Technical Rank (SCTR) moving above 80 in late January and remaining above 80 the last three weeks. This confirms relative strength in ITB.

SILVER GETS A BREAKOUT AND RESISTANCE TARGET... The Silver ETF (SLV) joined gold with a surge and break above the December high. Chart 9 shows SLV finding support near the summer lows and consolidating for two months. Even though a consolidation within a downtrend is typically bearish, the ETF did not break support and instead broke resistance with a surge above 20. This breakout is bullish as long as it holds and chartists can mark next resistance in the 25 area. Chart 10 shows the Gold SPDR (GLD) with the next two resistance levels.

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Chart 9

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Chart 10

BASE METALS FAIL TO FOLLOW PRECIOUS METALS... The Base Metals ETF (DBB) got a bounce over the last three weeks, but continues to lag silver and remain in a downtrend. Chart 11 shows DBB with a series of lower lows over the last three years. In fact, the ETF hit another new low with the dip below 15.70 in early February. Even though the decline shows signs of slowing since summer, we have yet to see any kind of breakout that would suggest a trend reversal. The October-December highs and trend line zone mark resistance in the 17 area.

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Chart 11

COPPER STOCKS START TO LEAD COPPER... Copper is one of the reasons the Base Metals ETF remains weak. Chart 12 shows the Copper ETF (JJC) consolidating around 40 over the last nine months. Despite some firmness and a slowing downtrend, this is still a consolidation within a bigger downtrend. JJC has higher lows working in early December and early February, but a breakout is needed to get a reversal.

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Chart 12

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Chart 13

Chart 13 shows the Copper Miners ETF (COPX) perking up with a surge and triangle breakout. Even though this breakout is certainly positive, the ETF has yet to break back above its major resistance zone in the 10-10.2 area. The indicator window shows COPX relative to Spot Copper using the price relative (COPX:$COPPER ratio). COPX has outperformed copper the last two months as this ratio turned up. A break above the autumn highs would be positive for the copper miners and could foreshadow an upturn in copper prices.

NIKKEI SURGES OFF SUPPORT AS YEN WEAKENS... The Nikkei 225 ($NIKK) surged over 3% on Tuesday as the Yen fell against the Dollar. Chart 14 shows weekly bars with the Nikkei hitting a new high at yearend. As with US stocks, Japanese stocks were overbought at the end of 2013, but in clear uptrends. Even though the January decline was quite sharp, I viewed it as a correction within a bigger uptrend and put forth a support zone in the 14200-14500 area in the Market Message on February 3rd. Today's 3+ percent move affirms support and provides the first indication that the bigger uptrend is resuming.

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Chart 14

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Chart 15

Today's surge was attributed to weakness in the Yen and in increase in quantitative easing from the Bank of Japan (BOJ). The indicator window in chart 15 shows the Yen Index ($XJY), which represents the Yen/Dollar cross. The Yen weakens when $XJY rises and strengthens when this index falls. The Yen Index has been rising in 2014 and this spurred a correction in the Nikkei this year. Today's decline is clearly positive for Japanese stocks, but the Yen Index has yet to actually break down and signal a continuation of its long-term downtrend.