HEALTHCARE SPDR TRADES OVER 200-DAY AVERAGE -- WATERS CORP BREAKS OUT TO NEW HIGH -- ABBV, AMGEN, AND GILEAD SHOW STRONGER CHART PATTERNS -- PHARMA IS BEING LED HIGHER BY MERCK AND BMY -- ABBOTT LABS CLEARS 200-DAY LINE
HEALTHCARE SPDR CLEARS 200-DAY AVERAGE... Healthcare stocks continue to get better. The daily bars in Chart 1 show the Health Care SPDR (XLV) trading back over its 200-day average and at the highest level since the start of the year. The XLV/SPX ratio (top of chart) has been rising since mid-March after underperforming for the previous two months. Biotechs and pharma are the main reasons why. Medical equipment stocks are another reason why.
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Chart 1
WATERS CORP BREAKS OUT ... My April 4 message on an improving healthcare sector showed a number of medical equipment stocks hitting new highs. They included Boston Scientific (BSX) and Thermo Fisher Scientific (TMO). Here's another one. Chart 2 shows Waters Corp. (WAT) rising above its June and December highs to register a new record high. That earlier message showed Zimmer Biomet Holdings (ZBH) testing overhead resistance at its November high. Chart 3 shows that stock having since broken through that chart barrier. Zimmer has gained more than 8% over the last month. The fact that its 50-day average has climbed above its 200-day line is another bullish sign.
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Chart 2
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Chart 3
ABBV, AMGEN, AND GILEAD IMPROVE ... That same April update showed three biotech leaders testing resistance barriers. All three have since turned higher. Chart 4 shows AbbVie (ABBV) trading well above its 200-day average after rising above a major resistance line. Chart 5 shows Amgen (AMGN) trading at a new 2016 high after breaking through a falling resistance line as well. That biotech bellwether is nearing a test of its December high. Chart 6 shows Gilead Sciences (GILD) also rising above its falling trendline. It's approaching a test of its 200-day average. [Illumina (ILMN) is one of today's biotech leaders and is on the verge of clearing its 200-day line].
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Chart 4
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Chart 5
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Chart 6
MERCK, BMY, AND ABT ARE DRUG LEADERS... Here are some drug leaders. Chart 7 shows Merck (MRK) moving above a falling trendline extending back to the start of 2015. The drug leader cleared its 200-day line a month ago. Chart 8 shows Bristol Myers Squibb (BMY) extending its rally after achieving an upside breakout earlier in the month. Chart 9 shows Abbott Labs (ABT) rising above its 200-day line today (red circle) after rising above a falling trendline a couple of weeks ago. [Pfizer (PFE) has also cleared its 200-day with a 10% gain over the last month].
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Chart 7
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Chart 8
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Chart 9
ENERGY SPDR REBOUNDS... News that the weekend OPEC meeting failed to reach an agreement on an oil production freeze caused oil to open sharply lower this morning and energy stocks along with it. The stock market opened lower as well. Oil has since made back some of its losses which has helped stabilize energy stocks. Chart 10 shows the Energy Sector SPDR (XLE) trading higher today after bouncing off its 200-day moving average. Energy is the day's strongest sector. That's a good sign for that sector and the rest of the market. The Financials Sector SPDR (XLF) is the only sector still trading below its 200-day average. The XLF, however, is right up against that resistance line today. An upside breakout would put all ten market sectors in uptrends.
