HEALTH CARE SPDR NEARS TEST OF APRIL HIGH -- HEALTHCARE PROVIDERS ARE STRONGEST GROUP -- AETNA, CENTENE, AND HUMANA SCORE BIG GAINS -- UNITEDHEALTH GROUP HITS NEW RECORD
HEALTH CARE SPDR NEARS APRIL HIGH... Healthcare stocks continue to gain ground despite a generally soft stock market. Chart 1 shows the Health Care SPDR (XLV) trading higher today and nearing a test of its April high. The XLV/SPX ratio (top of chart) continues to gain ground as well. Yesterday's message focused on biotech and pharmaceutial leaders, as well as leaders in medical equipment and supplies. Today's message will focus on health care providers.
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Chart 1
HEALTH CARE PROVIDERS ARE LEADERS ... Health care providers are one of the groups leading the healthcare sector higher today. Chart 2 shows the Dow Jones US Health Care Providers Index ($DJUSHP) rising today after recently bouncing off its moving average lines. Its 50-day line has also crossed over the 200-day. The chart shows the index rising above a falling resistance line in March which ended its 2015 downtrend. It's now headed toward a test of its April high. Its relative strength ratio (top of chart) also appears to be bottoming. This week's price gains have been accompanied by rising volume which is a positive sign.
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Chart 2
AETNA BREAKS OUT TO NINE-MONTH HIGH ... Aetna is a standout performer in the health care provider group. Chart 3 shows Aetna (AET) surging today to the highest level since last September. Its moving average lines are also in positive alignment. Its relative strength line (above chart) is also rising. AET is also one of the day's strongest stocks in the XLV.
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Chart 3
CENTENE CORP TURNING UP... Chart 4 shows Centene Corp (CNC) climbing to a one-month high today. The health care provider appears to be headed for a challenge of its "neckline" drawn over its January/April high. Its chart pattern looks like a bottom in the making. Its relative strength ratio (above chartg) is climbing as well.
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Chart 4
HUMANA SURGES... Chart 5 shows Humana (HUM) surging today to the highest level in two months. That stock also appears to be tracing out a bottoming formation. It will need, however, to clear its spring high to turn its main trend higher. I suspect it's heading in that direction. Its relative strength ratio (top of chart) also appears to be bottoming.
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Chart 5
UNITEDHEALTH GROUP HITS NEW RECORD... Chart 6 shows Unitedhealth Group (UNH) hitting a new record high today. It's a clear leader in the health provider group. The stock broke out to the upside in March and successfully retested its breakout point (see box). It recently bounced off its 50-day average before resuming its uptrend. Its relative strength line is trading at a new record as well. UNH is the fourth biggest holding in the XLV (4.75%). So it's exerting a bullish impact on the healthcare sector. Health care providers are the third biggest group in the XLV (18%) behind pharmaceuticals and biotechs. Which, in my opinion, adds to the relative attractivensss of the healthcare sector. The fact that it has defensive characertistics is another plus.
