HEALTHCARE SPDR TURNS UP -- HEALTH CARE EQUIPMENT AND MEDICAL DEVICE ETFS HIT NEW RECORDS -- HEALTHCARE PROVIDERS ETF TOUCHES 52-WEEK HIGH -- BIOTECHS AND PHARMACEUTAL ETFS SHOW IMPROVEMENT BUT ARE HEALTHCARE LAGGARDS
HEALTH CARE SPDR TURNS UP... In case you haven't noticed, the Health Care SPDR (XLV) has taken a bullish turn. Chart 1 shows the XLV breaking out of a bullish "ascending triangle" that I described in my February 4 message. At the same time, the XLV/SPX ratio (top of chart) appears to be bottoming. And while biotech and pharmaceutical stocks have improved, healthcare leadership is still coming from other places. That earlier message showed three healthcare ETFs that are leading the healthcare sector higher. Two of those three have since hit new records.
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Chart 1
LEADING HEALTHCARE ETFS... These are the three leading health care ETFs described in my February 4 message. Chart 2 shows the S&P Health Care Equipment ETF SPDR (XHE) having since hit a new record high. Chart 3 shows U.S. Medical Devices iShares (IHI) hitting a new record as well. Those are the two clear healthcare leaders. Chart 4 shows the U.S. Healthcare Providers iShares (IHF) recently hitting a new 52 week high. My previous message suggested that those three ETFs offered the strongest choices in the healthcare sector. They still do.
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Chart 2
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Chart 3
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Chart 4
BIOTECHS AND BIG PHARMA ALSO STRENGTHEN ... The two parts of the healthcare sector that get the most attention are biotechs and pharmaceuticals. Both groups, however, have been the weakest part of that sector. But they are starting to show some improvement. Chart 5 shows the VanEck Vectors Pharmaceutical ETF (PPH) rising to the highest level in three months. It's also nearing a test of its 200-day average (red arrrow). The relatively small size of of its base, however, doesn't inspire a lot of confidence. Chart 6 shows the Nasdaq Biotechnology iShares (IBB) recently touching a four-month high to improve its short-term trend. It still needs to clear its September peak around 300, however, to turn its major trend up. Both groups are especially vulnerable to problems related to the pricing of drugs, which raises their risk level. For those looking to invest in this sector, the three top ETFs shown above offer the strongest choices. Or an investor can just buy the entire sector via the Healthcare SPDR (XLV). With so much of the market looking over-extended, healthcare may be one of the few sectors that still offers real value.
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Chart 5
